on October 2, 2023
Deliveroo Business Model, How It Works & Revenue Model
All happiness depends on a leisurely breakfast. Now, that is a great way to start the day. Wouldn’t you agree? According to studies, skipping breakfast can harm mood and energy levels. Not to sound grim, but skipping breakfast is also believed to cause psychosocial problems, another reason you should think twice before missing out on your meals. In our everyday attempts at expediting our routines, it is only imminent that we barely find time to cook a proper meal. In such instances, the on-demand food delivery system is all that is needed. Deliveroo, headquartered in London, is one such on-demand food delivery system founded in 2013 that caters to the needs of its customers by promptly delivering food to their doorsteps. With its reliable services, Deliveroo business model has seen rapid growth.
Deliveroo is now operational across countries such as France, Spain, Italy, Ireland, Hong Kong, Singapore, and Australia.
Deliveroo Business Model
Deliveroo works on delivering customers their favorite food from the restaurants listed on its platform. Deliveroo helps restaurants be more available to their customer base.
In less than a decade into business, Deliveroo has garnered a 22% market share in the UK. Deliveroo delivers food to users ordering on the Deliveroo app or website. The Deliveroo app is available on Android and iOS.
Deliveroo intends to ensure efficient delivery. The delivery radius is limited to achieve efficiency. The key stakeholders of the Deliveroo business model are customers, restaurants, and riders.
Restaurant Partners
Restaurants may be unable to reach a large customer base due to their inability to provide delivery services. In such cases, partnering with Deliveroo helps them gain an audience. Restaurants partnering with Deliveroo have witnessed significant growth, which has led Deliveroo to work with 50,000 restaurant partners.
Deliveroo incorporates ways to position the restaurants they partner with better than the other restaurants.
Brand Promotion
Deliveroo engages in promoting restaurants so that their visibility increases. Thereby directly helping them expand their reach.
POS Integration
Deliveroo enables restaurants to connect their menus with the POS (Point of Sale) system. Staff won’t have to enter the order manually as the POS integration allows orders to be received directly.
Support and Insights
The support and insights provided by Deliveroo promote and grow businesses, help them acquire new customers, and increase sales.
Deliveroo uses an algorithm called Frank that powers every order. Deliveroo uses this algorithm to improve efficiency in delivering orders based on the location of restaurants, riders, and customers.
Delivery Partners
Deliveroo’s commitment to prioritizing the safety and well-being of its riders has attracted about 50,000 self-employed riders working for them today. Some of the factors that may have influenced riders in choosing Deliveroo over the other food delivery platforms are:
Deliveroo’s decision to offer insurance to its riders has given it a competitive edge over the others in the business. This move has helped Deliveroo retain its riders. Close to 45000 riders are covered.
Deliveroo ensures flexibility to its riders when it comes to their working hours. Deliveroo riders are free to choose when and where they wish to work. Riders getting to decide their shift timings has proved to be well received.
Other Benefits
Not only does Deliveroo provide free insurance for its riders but also road safety training. Deliveroo exemplifies its inclination toward riders’ welfare by introducing contact-free delivery in the wake of the pandemic and running regular road safety campaigns.
How does Deliveroo business work?
With the help of an on-demand food delivery application like Deliveroo, food ordering and delivery are made relatively simple. Once the users make orders on the Deliveroo app or website, Deliveroo delivers food from restaurants to customers through its riders. The following are the steps involved in ordering from the Deliveroo app:
Users can browse through the restaurants enlisted on the Deliveroo app after signing up and navigate through the menus to select the food from the outlet that interests them. Deliveroo only accepts card payments to create a safer working environment for its riders.
The outlet that the customer has ordered from receives a notification. After this, the outlet works on getting the food prepared and ready for delivery.
The restaurant confirms the order depending on the availability. Deliveroo’s riders stationed near the restaurant then receive notifications. Riders collect the food from restaurants and deliver them to the customers at their doorstep without compromising the quality.
Deliveroo’s Revenue model
Deliveroo’s annual income has seen a considerable increase since its inception. Deliveroo increased its revenues by 56% in 2021 to € 1.8 billion. It has managed to double its revenue in the past three years. Deliveroo’s revenue stream includes commission fees, delivery fees, service fees, small order fees, and Deliveroo Plus.
Commission fee
Deliveroo charges a commission from restaurants for orders made through the Deliveroo app. The commission depends upon the location of the restaurant. Deliveroo is said to charge a commission fee of anywhere between 25% and 45%.
Delivery fee
One of the ways by which online food delivery systems like Deliveroo make money is through delivery fees. For each delivery, Deliveroo charges its users.
Service fee
Deliveroo also charges a service fee to provide a great customer experience by adding new features.
Deliveroo Plus
Deliveroo Plus is Deliveroo’s subscription membership plan. Members get to enjoy exclusive offers which are not available to other customers.
Bottom Line
Today Deliveroo is active in more than 200 cities globally. With its commitment to offering reliable services, Deliveroo has managed to make a name for itself. Having been Deliveroo’s first rider, the founder, Will Shu, started with just three restaurants to provide its users with the best food delivery experience, and today has seen phenomenal growth, partnering with 50,000 restaurants.
To know more
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