How do food delivery apps earn?

Have you ever thought while ordering food that how does a food delivering app earn? This is a question that arises in many minds when they are having food at home.

Sources of Income :
A food delivery application has various sources of income from which they earn. Starting with commissions on each order. On each sale made the company charges the restaurant with a specific percentage of commission that is usually communicated earlier with the restaurant. This can vary from 7% to 35% depending on the factors like brand image, Currency value, restaurant image, area, city, country, basket size of orders, & the number of orders per day.

The Commission Structure:
Let's focus on the first point further. for example, a restaurant ABC Restaurant was contracted on a 30% commission with the food delivering company so whenever you order food worth 100 Rupees, 70 would be given to the restaurant and the rest 30 would be the company’s share.

Earnings Through Premium Listing & Marketing:
The other way these companies earn is premium listing, For example, if a location has 300 restaurants nearby to it so its quite difficult that the one showing on 296th number on the app will get orders, So for this, the company sells its top 10 or 20 positions on a fixed amount taking the charges for premium listing. This can be really tricky and vital for a good brand to get visibility and get more & more orders.

Premium Listing:
Deep diving into point 2, There are usually two types of customers entering a food delivery application.

1)Those who have decided the restaurant and food they want to order.
2)Those who are roaming around to find a good choice to satisfy their craving.

Here comes a chance for all those restaurants who have purchased premium listing to earn and maximize their orders. Around 20% of the company revenue comes through premium listing or marketing of these restaurants.

Investments :
The third factor a food delivery application does is hold the money of vendors for a week or so, This helps them to invest there amount in stocks and earn a profit on it. Succesful food delivery applications now have proper treasury and they roll the money of restaurants before putting it into their accounts after a week.

I hope this article would be a great help for young boys & girls planning for startups or want to learn how the e-commerce industry has grown exponentially within a few time. In my next article, I would be sharing insights regarding the parties that share this commission and how many people including riders earn from this 7% to 35% share.

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