What are the Business Models of Meal Delivery Start-ups?

These days, food start-ups are one of the necessities among the people, the reason being its psychological appeal. They promise us to save our time and effort. More than delivering convenience, they also deliver a simple service attribute across every customer touch-point. Researchers have listed out five specific opportunities for convenience tech to buy customers time and save them the effort. They are as follows:

  1. Decision convenience
  2. Access convenience
  3. Transaction convenience
  4. Benefit convenience
  5. Post-benefit convenience

The a la carte food industry has rendered the traditional markets disrupted by paying heed to a full cycle approach to the three basic elements of a meal experience at a restaurant:

  1. Ordering: customer’s request to prepare food.
  2. Cooking: the process of preparing meals for the customers
  3. Delivering: transportation of goods and services from one place to another.

Business Models

  1. The Order Only Model

This model was followed by the first generation restaurants. It centralized on the first step that is to act as a pure software layer that averages the fragmented offering of independent restaurants which can manage their own batches of couriers.

The technology worked as follows:

  • Customer places an order on the website
  • Restaurant receives order via email
  • Restaurant notifies that the order is received
  • Companies send order to the web app

Delivery is done either by the delivery man employed by the restaurant or a meal delivery service like Missfresh.

  1. The Order and Delivery Model

The new restaurant marketplaces, focus on step 1 and 3 of the process. They bring additional orders, request the eateries, and manage the delivery via their batches of independent couriers like an app similar to Uber.

Ordering takes place in the app where the menu is uploaded. Sometimes the prices are raised to pay the delivery service provider by a certain amount. The customers are also charged a flat fee. When the order comes in, it is transferred to the couriers closest to the pickup location.

When the courier is on duty, his location is tracked by the courier phone app. When an order is received, couriers are asked whether or not they can do the job. The first person to claim, gets the job. If no one is available, it will be sent to other couriers who are further out or be denied. This data helps in optimizing routes which gives when a huge technological bonus.

  1. The Fully Integrated Model

They develop their own app which helps the customers place their orders which is reheated in their own fleet of cars as orders are received. Then, they are delivered as fast as possible, within a time-frame. They trade choice for convenience and a highly curated experience.

The decision to allocate an order can happen in two ways:

  • Automatic: the order is allocated to the nearest driver or to the driver in whose zone the customer lies.
  • Manual: The order goes via the admin to the driver closest to the customer or the driver who has packed meals requested for by the customers. The latter happens when a driver rejects a request due to non-availability of a meal.

Delivery is done by the drivers employed by the company. There are two factors which determine the delivery:

  • First come first serve, where it does to the customer who ordered first
  • Location based: Customer nearest to the driver will be serviced first.

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