The millennial generation is more inclined to use on-demand food delivery services instead of traditional dining. Mean delivery apps have made life simpler by providing a wide range of restaurants, endless cuisine, and one-click payment options. Moreover, food delivery apps don't just convey convenience as a simple feature; they convey convenience to clients at all levels.
Every competitor in the on-demand food delivery industry constantly offers something new, making the industry extremely competitive. As a matter of fact, the customer needs everything available at the touch of a button in any case. We live in a world where on-demand food delivery applications are becoming more frequent.
There is no doubt that food cravings will never go away, and the food industry is seeing a rapid increase in demand every single day. And the Middle East is not an exception! There have been 9.7% more restaurants and cafes in Dubai this year, and the numbers are increasing every day. Rather than visiting new restaurants or trying new cafes, more people use on-demand food apps like Talabat, Zomato; Uber Eats, Eateasy to order freshly prepared food at their convenience.
You can use these apps 24x7 without worrying about the quality of the food, whether you're craving a snack mid-night or ordering food in bulk for a dinner party. There are many food delivery apps across the UAE, but Talabat holds the first position. Therefore, many entrepreneurs want to know which business model Talabat follows and how does it make money? Well, if you want to know the same, this blog post is for you. Keep reading on.
Know Little About Talabat
With Talabat, food delivery has become an effortless experience for both restaurant owners and customers since 2004. As a result, food delivery has been revolutionised in the Middle East and North Africa. With the advancement of modem technology to seamless technology, Talabat can now offer customers easy and fast delivery, accurate tracking, and two ways to communicate with customers and delivery agents.
According to CrunchBase, Talabat acquired a popular Indian food delivery app, Zomato, in 2019 for 172million, and this deal helped them gain the biggest market share in the Middle East regions. Hence, entrepreneurs idealized Talabat's business model and want to build an app similar to talabat as it has garnered attention among UAE's people and also help restaurants to keep their business afloat amid contingencies.
Furthermore, they stopped limiting themselves to food delivery. Instead, they expanded into grocery delivery, pharmaceuticals, and flower delivery, opening new business opportunities. Their efforts successfully expanded into seven different countries: Kuwait, United Arab Emirates, Qatar, Egypt, Oman, Bahrain, and Jordan.
Talabat has collaborated with more than 5500 restaurants, processed more than 100 million orders on this platform, and had more than 2,000,000 downloads in 2017. After its overnight success, every small and large entrepreneur wants to know about the business and revenue model of Talabat along with its work.
Business Model of Talabat
In the first place, Talabat is not only a listing of on-demand restaurants, but it also lists on-demand delivery companies that deliver food items. The business model of Talabat is solely focused on providing food delivery services that are hyperlocal on-demand.
The Talabat application uses new technology and a unique design to bring restaurants and food lovers together. It operates on a dual relationship basis, which means it also benefits restaurants. Let's see how the company offers a unique value proposition to each stakeholder involved.
- Order food and other essentials online from their website or application
- Easily pay online from the options given including debit card, credit card, wallet, etc.
- They can choose a dish or item from the extensive range of restaurants and stores
- Customers can also track the order and see the Estimated Time of Arrival
- Customers are also free to live reviews and ratings to the restaurant and delivery provider
Restaurant or Store
- All the restaurants or stores that can register themselves on the platform can benefit from the extended customer base
- Taking advantage of the popular platform, they open the doors to new business opportunities
- Restaurants can also deliver the orders without owning fleets or delivery providers
- Overall, they can generate an attractive amount of revenue
- As a delivery partner, you can earn a substantial additional income.
- This allows them to work on their own schedule and benefit from the flexible time slots.
- Their salaries are not confined to what the employer provides. They can keep any additional tips the customers leave them.
In short, Talabat's business model is beneficial to all the stakeholders involved in it. Now, let's understand its revenue model.
How Does Talabat Make Money?
The Talabat revenue model is a three-pronged approach, generating revenue from these three sources:
- Commission on orders
- Delivery charges
Commission on Orders
Talabat takes a commission of 15% to 25% from restaurants' order bills. Furthermore, restaurants can reduce their commission by 5% to 10% if they opt for exclusivity. Exclusive restaurants help them get more business while decreasing competition.
In 2020, the Online Food Delivery segment generated 626 Million US Dollars in revenue. By 2024, it will generate 752 Million US Dollars. This is also an excellent way to make money from delivery charges based on the location and amount of the order. Particularly in cases where restaurants lack delivery personnel, it can be profitable.
In order to make money from this strategy, food delivery apps used to partner with restaurants and listed their names on their deal pages. Then, they passed on the order for a discounted deal to the restaurant once it was received. The restaurant capitalizes on these discounts to sell the side dishes.
Both restaurants and app owners benefit from this approach. An increase in commission is proportional to the increase in the order.
You can order groceries and food online and pick them up with Talabat. Founded in 2004, this company has topped the industry in a number of aspects. A big part of Talabat's business model resembles those of Uber and Lyft and other household names. Aside from commissions, the company also makes money from delivery fees, subscription fees, and advertising.
The online delivery business is highly in demand, after reading this post, you will surely come to know why Talabat is popular and what different facets entrepreneurs should consider while developing a similar solution.