Keeping a business online has always been a Future-proof strategy for almost a decade now. After the COVID-19 pandemic, it has only been a stamp approval on the above fact. It has condemned every single businessman, entrepreneur, and all other sorts of money-earning sources that if you’re online you can survive in any situation, without suffering much. Food delivery services like Foodora have taken over the traditional restaurants and delivery service businesses ever since. In this article, we’ll explore the Foodora business model in detail. It will help our curious readers to get answers to their most frequent questions i.e., “How does Foodora make money?” and “How does Foodora work?”. Read the full article to get in-depth answers to your questions.
When we talk about online businesses, we certainly take into account online shopping websites and apps. They have been quite a boom in the market. But on the other hand, we can’t deny the role of food delivery apps and websites and their importance in modern-day living.
Now, If you have been quite a customer of an online food delivery system you might have encountered a brand Foodora. With Foodora headquarters situated in Stockholm Sweden, the company has been delivering food for the last seven years. It began its operations in early 2014 and since then it has achieved several milestones. Let’s dig deep into the facts of the online food delivery brand Foodora run by Delivery Hero.
Foodora is an on demand food delivery platform that is owned by Delivery Hero. It was founded in Munich, Germany, and currently remains available in Sweden, Norway, and Finland. The company is currently established in 19 countries in North America, Europe, and Asia. In April 2020, the company was established in 28 Swedish cities.
Foodora- the beginning
In February 2014, Foodora was founded under the name Volo GmbH in Munich. Then in April 2015, the company moved to Berlin when Rocket Internet completely acquired the company. Two months later, Foodora acquired Hurrier (in Canada), Suppertime(in Australia), and Heimschemecker (in Austria). These companies now run under the name of Foodora. In September 2015, Delivery Hero acquired Foodora from Rocket Internet and it was merged with Delivery Hero’s food delivery brand, Urban Taste, under the name Foodora
Foodora Business Model
Foodora has some of the best restaurants, selected mainly for the quality and the offers according to preferences of the users, and is slightly different from the traditional takeaway concept that has been followed by us. With some clicks and taps on the screens, we have hundreds of restaurants ready to serve delicious meals at our doorsteps with Foodora, in minutes. Technology is evolving day by day and today, the mix of technology in the food industry is the most sought recipe.
It takes 30 minutes on average for the food to be delivered from the restaurant to your doorstep as soon as you have placed the order. The users can track their order life. The order follows a checklist on the app/website giving the customer full transparency as to whether their order has been accepted or whether it is being cooked. It doesn’t end here, once a delivery guy/ Valet has been appointed to deliver the customer’s food, the customer can track their food live on a map. Let’s get into details of Foodora’s delivery system to answer how Foodora works.
How does Foodora work?
Before a customer can browse through restaurants and order their food they have to verify their details like name, phone number, addresses, etc. Once these are done the customer proceeds with the ordering process by selecting the cuisine. On placing the order, the app sends details to the restaurant. On receiving the details, the restaurant confirms that it can prepare the order and gives an estimated time for the arrival of food to the customers. A delivery guy is appointed for each order with the details of the restaurant and the customer. The restaurant receives the ETA for the delivery guy to arrive at the restaurant to pick up the order and prepare the food accordingly. Once the delivery guy is at the restaurant, the order is picked up and then delivered to the customer.
One thing noticeable in this delivery system is that the company allows the delivery of food on a bike only to be environmentally friendly. Due to this limitation, the food can be ordered from a restaurant within 1.1 miles only, to keep up with the commitment of delivering the food within 30 minutes from being ordered. But, the company doesn’t provide its riders with a bike or a smartphone either. Instead, it only provides the delivery box which is of pink color, a helmet, and a jacket with the brand name of course printed on it.
People interested in this job must have their own bikes and a smartphone of their own. Some delivery guys have shifts in which they have to be present for the service while others can start delivering the food whenever they feel like having some exercise. Mostly the students who are interested in this job want a part-time job to fulfill their extra expenses or earn some extra bucks Which usually lands them with around US$14 for an hour of work plus a tip.
Foodora provides delivery of meals from the best restaurants in Europe. The company currently has a global partnership with 650 restaurants.
Here is the list of areas where this food-delivering app is available (As updated on the Foodora-Delivery Hero website):
- America
- Asia
- Europe
- The Middle East and North America
Who are Foodora’s investors?
The Germany-based startup company is now acquired by Facedrive as published in the report of Crunchbase. Foodora has raised one funding round in total. This particular round was a Non-equity Assistance round that was raised on Jan 1, 2016.
The company has one investor i.e., Startup Edmonton with 2 acquisitions. Foodora has acquired 2 organizations namely, Heimschmeker and Hurrier.
How does Foodora make money?
Well, a business isn’t a successful business until it starts making money from the customer. That’s what this is all about. Foodora is a successful source of business, generates quite ample amount of money for the organization. A food delivery app generates money in two ways- one way is to earn by delivering food and the other, is from restaurants.
The first one depends on the delivery fee charged per delivery and varies from city to city. e.g. In Munich, it is currently €2.90 or US$3.1 per delivery. On the other hand, the second way of earning is that 30% of the order price is paid by restaurants to the food delivering company. For example for a €100 order, they pay €30 to Foodora. Yet despite giving 30% the restaurant still makes benefits from the order. In Germany, there is a VAT for a restaurant meal that is 19% but for takeouts, it is only 7% which means the difference of 12% is earned by the restaurant that normally customers don’t know about. This provides quite a boost to the profit margin.
Despite not generating too much profit from food delivery orders, the restaurant still welcomes this because it is a very smart way to generate additional revenues/profits apart from their usual profit from the dine-in customers.
Especially for popular restaurants, it is usually seen that their reservations are full after a certain amount of time hence the food delivery attracts extra customers due to which they don’t mind settling for a less profit. Due to the small revenue of profit in food delivery, it becomes quite crucial to maximize the number of customers. To do this, Foodora does pretty good marketing by painting buses pink with the brand name on them. Other forms of graffiti have been spotted quite a bit.
TL;DR – Foodora Business Model
While Fintech has always been a point of focus for most other entrepreneurs and investors, the food-tech industry is not left from its blooming flames. It has also become an important part of the startup world. Some of these top food delivery apps include Foodora, Zomato, Swiggy, etc. The German parent company of Foodora i.e. Delivery Hero is continuing to generate revenues and is now worth € 9.18 billion ($14.7 billion). The space of the food tech industry is so sizzling that most of the investors are ready to dive into this sector. It is one of the most promising sectors in the Indian startup ecosystem because the on-demand services that the food tech industry offers are the day-to-day needs of people and that’s the reason that this sector is becoming increasingly popular.
Are you planning to start your food delivery app? Explore our guide and services on food delivery app development. Get advice from our experienced team building award-winning Fintech products and scaling successful startups for over 20 years. Contact us today for a free quote on your food delivery app project.
