Online Food Delivery Business Models- A Detailed Guide

Last Updated: 20th January, 2025

The online food delivery market is evolving and expanding at a drastic scale. The unprecedented growth of the food delivery industry extends a plethora of opportunities for businesses to start an online food delivery marketplace. According to Statista, the global food delivery market is expected to reach a market volume of US $1.91 trillion by 2029, growing at a CAGR of 9.38% in the forecast period (2024-29). 

However, before creating a new food delivery platform, strategizing the business model is one of the initial requirements. It is highly advisable for businesses to analyze the market, and accordingly choose the business model for their online food delivery business. Entrepreneurs should be familiar with various online food delivery business models and their advantages and challenges to make well-informed decisions.

In this blog, we will discuss different business models for online food delivery businesses and guide you in choosing the right one for your venture. But before diving into the vast information, let’s explore the food delivery statistics to know the future scope of this industry.

Key Food Delivery Industry Statistics

• The food delivery app industry is expected to reach a $213 billion market size by 2030. 
• The food delivery industry app domain will be worth $165 billion by 2029. 
• Approximately, 60% of consumers order food online at least twice a week in the USA.
• According to Grand View Research, the online food delivery market size is expected to grow at a CAGR of 9% from 2025 to 2030. 
• More than 2.5 billion people will receive food delivery services by 2027 worldwide.
• Since 2014, the number of online food delivery orders has increased by 300% compared to dine-in food orders. 

Top Players in the Online Food Delivery Industry and Their Business Models

Before gaining insights into the online food delivery business models for your own food delivery business, it is crucial to understand the business models of the popular players in the industry. In this section, let’s gain insights into the business model of popular food delivery platforms. 

1. Doordash 

Doordash is a popular food delivery platform that connects customers, restaurants, and delivery personnel all in one place. Based in the USA, Doordash has 37 million+ monthly active users on the platform. 

Doordash Business Model 

Doordash works on the order and delivery business model and caters to the needs of customers, restaurant owners, and delivery staff (dashers). The customers place food orders through the platform, restaurants fulfill these orders, and delivery personnel successfully deliver the orders to customer’s doorsteps. Doordash earns revenue by commissions, delivery charges, and subscription fees. 

2. Uber Eats 

Launched in 2014, Uber Eats is a popular American online food ordering platform. This platform enables users to order food from their favorite local restaurants which gets delivered to their homes in a quick time. 

Uber Eats Business Model 

Leveraging Uber’s ride-hailing infrastructure, Uber Eats delivers meals to customers. It partners with multiple restaurant vendors that offer diverse cuisines and food options. Customers browse the menu and order food, restaurants get notified, and once the meal is ready, drivers collaborate to deliver food seamlessly. Its revenue channels include commissions, delivery fees, premium subscriptions, and more. 

3. Talabat 

This Qatar-based food delivery platform was founded in 2004. Offering a wide range of food choices and convenient food delivery options, Talabat has become a household name in countries like UAE, Kuwait, Saudi Arabia, and more. 

Talabat Business Model 

The users search nearby restaurants and get the food delivered to their desired location. Talabat serves as an intermediary between customers, restaurant vendors, and delivery staff. The platform earns revenue from commissions, delivery charges, advertising, and more.  

4. Grubhub 

Grubhub is a popular food delivery platform based in the USA. This platform features 375,000 restaurant partners with a presence in over 4,000 US cities. Customers place orders through Grubhub app or website. 

Grubhub Business Model 

Grubhub operates under three streams catering to customers, restaurant partners, and delivery riders. The customers search for food items and place an order, after the successful payment, the restaurant gets notified. Once the food order is prepared, the delivery personnel picks the order from the restaurant and delivers it to the customer. Their revenue streams include commission fee, delivery charge, listing fee, and more. 

Now that you are well aware of the popular food delivery platforms and their business models in the industry, next, let’s explore different types of food delivery business models, their advantages and challenges. 

Different Types of Food Delivery Business Models

There are many business models prevalent in the online food delivery industry. Choose a business model that best suits your aspirations, business ideas, and future goals. Below is the list of the most popular and profit-making food delivery business models. 

Types of Food Delivery Business Model 

Here are the top food delivery business models: 

Cloud Kitchen Business Model 

A cloud kitchen is a delivery-only service, with no physical storefront, or dine-in space. In this business model, the platform owners launch an online food delivery marketplace where customers can place food orders to get it delivered to their doorsteps. From cooking to packaging to delivering food orders to the customer is solely handled by the platform owner. 

Advantages 

• The platform owner has complete control over the business and its operations.
• Launching a cloud kitchen is seamless with lower financial investment. 
• As there is no storefront, the overhead costs are very low. 

Challenges

• Considering the highly competitive scenario, establishing the business in the beginning may take time.
• Dependence on third-party food delivery aggregators for efficiently delivering the food to customer’s doorstep. 

Order Only Model 

In the order-only business model, the platform owner is responsible for managing food orders only, and delivery can be handled by either the restaurants or third-party delivery aggregators. The platform owner charges a commission from the restaurants for offering their services through the platform. 

Advantages

• With this business model,  the upfront cost is very low.
• As the restaurants themselves would be responsible for handling food order deliveries, platform owners have to take no hassle of managing delivery operations.
• It is a scalable business model with a huge scope for expansion. 

Challenges 

• Considering the competition, attracting users in the beginning may be challenging.
• Your success is highly dependent on the services offered by the restaurants to your customers.

Order and Delivery Business Model

In this business model, the platform owner manages both the ordering and delivery aspects of the online food delivery business. The restaurants will only be responsible for preparing the food orders, the assigned food delivery personnel will deliver the food to the customer’s location. After the successful delivery of the food order, the admin charges a commission fee from restaurants and delivery personnel. 

Advantages 

• Scalable business model can be easily expanded by adding new restaurants and delivery areas. 
• Offer convenience to customers by providing the ease of ordering from multiple restaurants on a single platform. 
• Diverse business opportunities, by offering both food ordering and delivery services you can serve a wider range of customers. 

Challenges 

• Handling a delivery fleet can be expensive.
• May face difficulty in choosing the right system that can cater to the requirements of customers, restaurants, and delivery personnel all in one place. 

Reservation-Booking Business Model 

In this business model, the restaurants can cater to a specific demand of customers who want to have a convenient dine-in experience. By building a reservation booking marketplace, business owners can facilitate the reservation of tables in advance and connect restaurants with users looking to pre-book restaurants. 

Advantages 

• Rising popularity of reservation booking among customers.
• Restaurant owners can reduce the waiting time and avoid the hassle of long queues. 
• Admin need not manage any order or delivery operations through the platform. 

Challenges 

• Limited revenue channels with the primary focus on restaurant reservations.
• Dependency on restaurants for building a positive brand image among customers.

BOPIS (Buy Online, Pick-Up In-Store) Model

This business model works on the principle of allowing customers to buy and pay for their food orders online which they can pick later from the restaurant as per their availability. Through the marketplace, the admin offers convenience to customers and connects them with restaurants offering BOPIS services. 

Advantages 

• BOPIS is part of a multichannel shopping trend that offers lucrative business opportunities
• Reduced operational cost 
• Low cart abandonment rates 
• Decreased shipping costs and time 

Challenges 

• May result in long queues at the service counter and high waiting times for customers. 
• BOPIS may reduce the cost of shipping but that savings can quickly disappear if the in-restaurant experience suffers. 

Scheduled Delivery Business Model 

In this business model, the business owner caters to the target audience that desires to book their food orders to be delivered at a particular time. The platform connects customers with restaurants willing to deliver scheduled food orders. The customers purchase an order and choose a specific time and date for their orders to arrive. 

Advantages 

• This business model offers flexibility and convenience to customers, enabling them to plan their food orders ahead of time. 
• Considering the busy lifestyle of customers, the demand for scheduled deliveries is on the rise. 

Challenges 

• This business model can’t capitalize on the demand generated by users needing immediate food orders. 

Inventory Business Model

In the inventory model, the online food delivery business does everything in-house. From launching the food delivery website/app to preparing orders and delivering food to the customers, everything is done by the business owner. The platform owner controls the complete value chain. The food delivery business model doesn’t allow multiple restaurants to offer their services on a single platform. 

The order is cooked at the centralized kitchen owned by the business and is delivered by the courier service hired by the business. So the food delivery business owner can easily keep a check on the food quality. 

Advantages

• Don’t have to rely on a third-party food delivery platform and save the commission paid to the third-party platform and have complete control over defining the overall customer experience.
• Ideal for businesses having a chain of restaurants in a city with a delivery fleet of their own. 

Challenges

• High operational costs is the major setback for food delivery businesses based on the inventory model. 
• It becomes difficult for the kitchen staff to simultaneously cater to the online as well as dine-in orders.  

Integrated Business Model

The integrated food delivery model is flexible and the most sought after business model in the industry. In this model, delivery can be managed by both admin and restaurants. Many restaurants have their own pool of delivery agents and all they want is a platform to bring their offerings online. Online food ordering platforms functioning in accordance with the integrated model can easily cater to such restaurants. 

Advantages 

• The integrated model allows restaurants with or without the delivery fleet to be on the food delivery marketplace and function effectively. 
• Increase in the number of choices for customers in terms of dishes and restaurants. 

Challenges

• Need to streamline the delivery operations and assign delivery of every order as per the availability of the fleet with the restaurant. 
• Choosing the right software that can cater to the needs of this business model.

These are some of the popular food delivery business models. Entrepreneurs should carefully analyze the advantages & challenges, and opt for a business model that best aligns with their business idea. 

Ideal Business Model to Launch an Online Food Delivery Business

Choosing a reliable and sustainable business model is extremely crucial for the success of your business idea. All the business models mentioned in this blog have their own set of advantages and drawbacks. You can choose any of the business models depending on your business requirements, market trends, and target audience. Research well before making a final decision and choose the one that best suits your business idea. 

However, according to experts, one of the most popular and sustainable business models is the integrated business model. As it enables both the admin and restaurants to manage food delivery, hence, it is the most preferable food delivery business model. Whether the restaurant owns a delivery fleet or not, the integrated model provides flexibility to manage food delivery at their convenience.

There are several popular platforms that are functioning on this business model and are gaining tremendous success. Moreover, this business model enables business owners to earn profits with diversified revenue channels including commissions, delivery charges, and more. 

Best Food Delivery Software That Supports Your Desired Business Model– Yo!Yumm

Once you decide on the food delivery business model that meets your business requirements and facilitates you to achieve the set business goals, the next step is to choose a viable readymade food delivery software. Yo!Yumm is one such popular food delivery software solution offering all advanced functionalities and features to successfully build, and run an online food delivery platform. 

It offer cutting edge features specific to food delivery industry and is highly customizable to incorporate any of your food delivery needs. Moreover, Yo!Yumm supports 6+ business models and caters to 15+food delivery niches in the industry. 

There are multiple factors that make Yo!Yumm the best fit to start and scale your food delivery business. Following are the most notable ones:

• Hassle-free management of delivery

One of the biggest challenges for online food delivery businesses with the integrated model is to streamline the delivery management processes as managing delivery may prove to be a complex task with both restaurants and the admin involved in it. Yo!Yumm enables businesses to encounter the complexity of managing deliveries with its advanced functionalities. Restaurants can easily enable the self-delivery option on the portal and the admin gets notified about the same. So, when an order is received, the admin can check whether the food is to be delivered by the restaurants’ delivery person or the admin’s delivery staff. Hence, delivery management becomes a hassle-free affair with Yo!Yumm. 

• Real-time delivery tracking

Yo!Yumm is integrated with Google Maps which enables customers to track their orders in real-time. When the delivery personnel picks up an order from the restaurant, both the restaurant and customer can track his/her route and know the exact location of the delivery person. The real-time delivery tracking feature of Yo!Yumm helps you deliver an exceptional food ordering experience to the customers. 

• Order status update through in-app notifications

Yo!Yumm is a competent food delivery software designed with a user-centric approach and an advanced technology infrastructure. The solution enables in-app notifications to provide timely order status updates to the customers. The system sends regular notifications to keep various stakeholders updated at every stage of the food delivery process. 

• Multi-Payment Options

Yo!Yumm is integrated with multiple payment gateways enabling you to provide flexible payment options to customers. As the solution supports a wide range of payment options, customers can choose to pay via any mode i.e, Credit Card, UPI, Net Banking, Debit Card, and many more.  

Final Thoughts

It’s fair to say that the business model you choose plays a significant role in determining the business growth as it defines the course of operations for a business. Therefore it is of utmost importance to choose the right food delivery business model for your startup. You must consider factors like – convenience delivered to customers, alignment with your business goals, and the scope of technological advancements before deciding on the business model as well as the food delivery solution.  

As technology is disrupting the online food delivery industry, we recommend you to choose a technology-enabled food delivery solution like Yo!Yumm which empowers you to meet customers’ tailored demands and changing preferences.  

Yo!Yumm is one of the finest online food delivery solutions based on the integrated model with phenomenal features and functionalities. If you are looking to build an on-demand food delivery app with flexible delivery options, we would advise you to check out Yo!Yumm’s demo to understand how the solution provides complete ease of management to different sets of users i.e, admin, merchants, delivery staff, and customers.

FAQs

Q 1 How do online food delivery services make money?

Ans. A food delivery platform can make money by incorporating diverse revenue channels including commission fees, delivery fees, advertising fees, sponsored listing fees, and more. 

Q 2. What resources and technologies are needed to start a food delivery business?

Ans. Firstly, to successfully set up a food delivery business, you need the involvement of various experts and professionals from different backgrounds like business analysts, marketing experts, design specialists, and web developers. These specialists will support you at different stages throughout your entrepreneurial journey. Secondly, businesses would need a robust website, and mobile applications through which customers can place orders hassle-free. The online food delivery platform should be built on the latest technology with all up-to-date features. However, a hassle-free method to launch your food delivery business is to opt for a ready-made food delivery software like Yo!Yumm. 

Q 3. What are the challenges of starting an online food delivery business?

Ans. Here are the main challenges you may face while starting your online food delivery business:

• Unable to find reliable food ordering and delivery software to launch your business.
• Difficulty in retaining customers and onboarding popular restaurants after the launch.
• Inability to handle logistics operations. 

Read this blog to gain more information about different challenges and their solutions. 

Q 4. How do online food delivery platforms determine delivery fees?

Ans. The admin can decide the delivery fee based on the distance between the restaurant and the user’s location. After the successful delivery of the orders, the admin deducts a commission from this delivery charge, and the rest amount is added into the delivery person’s revenue share. 

Q 5. How do I launch an online food delivery platform quickly?

Ans. By leveraging a ready-made food delivery software like Yo!Yumm you can easily launch an online food delivery platform. Moreover, with Yo!Yumm you don’t need any technical knowledge or coding skills. This software enables you to launch a feature-rich food delivery platform & mobile apps that can cater to the demands of all the user-types.

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