HOSPITALITY

OPERATIONS
MANAGEMENT

BUSINESS MODELS
 I. The Order Only Model
This model was used by first generation of restaurant delivery services like JustEat, Grubhub,
Delivery Hero etc. and focused on the first step: they act as link between the aggregates
offering of independent restaurants (mainly takeaways), which manage delivery of food.
These software-only marketplaces main selling point to restaurants is to bring a lot of new
orders and replace their phone-ordering system with an online and mobile platform, that
integrates with their kitchen workflow.
Order Allocation:
The technology used by such companies for receiving and communicating the order to the
restaurant tends to work like this:

 Consumer places order on the website

 Restaurant receives order by fax or email.
 Restaurant notifies that order was received.
 Companies might start sending orders into a web app or a smartphone app.
 Restaurant chef prepares the food.
 The order is delivered to the consumer by the restaurant delivery person.

Delivery:

1. A delivery driver employed by the restaurant

2. A delivery driver employed by a restaurant delivery service like Straight 2 your Door.

Limitations: Their reliance on the restaurants’ own couriers mean that they are somewhat
limited in their offering of cuisines and price points: they have become mainly associated in
consumers’ mind with relatively low-end takeaway food (pizza, burgers, Chinese, sushi etc.).
It also means that they cannot control and optimize the speed and quality of the delivery.
Advantages: As they don’t touch the food itself (neither cooking, nor delivering it), these
platforms tend to charge a lowish fee of 10-15%. As any pure software business, they’re
highly scalable and have all experienced remarkable growth.
II. The Order and Delivery Model
The up and coming restaurant marketplaces (Doordash, Deliveroo, Caviar), which developed
in the previous two years, concentrate on step 1 and 3 of the procedure: they bring additional
orders and requests to the eateries, manage the delivery for them, through their fleet of
independent couriers connected by an Uber-like mobile app.
Order Allocation :
Ordering occurs at the app or website interface where the menu of a restaurant is uploaded.
Sometimes, to help them pay the commission fee to the delivery service provider, the prices
of items on the menu is marked up by the restaurants. The customers are also charged a flat
fee for every restaurant where you place an order. When an order comes in, it is sent to the
couriers closest to the pick-up location.
Delivery: When a courier is on duty, they are logged into their courier phone app which
tracks their location. On receiving an order, couriers decide whether they can or cannot do the
job. The first person to claim the job, takes the job. If no one takes the job, it will be sent out
to even more couriers who may be further out or be denied. Each delivery helps them gather
data that allows them to keep optimizing routes and pick-up/drop-off patterns, giving them an
enormous technological advantage.
Limitations : These are software and logistics companies and have a very significant amount
of operational work to do (couriers’ hiring and training, equipment maintenance, shift
planning, etc.). These on-demand marketplaces are therefore not as easy to scale as the pure-
software one.
Advantages : They benefit from stronger barriers to entry and scale advantage: it will be
very hard for a new entrant to compete against these optimized networks of restaurants and
couriers, once they will have reached maturity in a city. They also charge higher commission,
25-30% on average. Their prime feature is that they can offer a range of restaurants and price
points that software-only marketplaces cannot.
Some startups crowdsource the cooking process wherein vetted home chefs provide home
cooked meals. Businesses built on this model employ people to deliver food from the chef’s
homes to drop-off locations.
III. The Fully Integrated Model
The third category of meal delivery startups, which includes Sprig, Maple and SpoonRocket
have opted for a full integration of the process: they developed their own app through which
consumers can order a limited range of meals, reheated in their own fleet of cars as order and
delivered as fast as possible or within a time window stipulated by the customer (as they save
on the kitchen preparation time). They trade choice for convenience and a highly curated
experience.
These on demand businesses have hubs i.e kitchens that cater to the food orders of a
particular area. There is usually a different menu everyday. There are two ways in which
hubs are servicing right now:
Scheduled Delivery
The kitchen opens to receive orders for a particular duration, primarily for delivery
scheduled later in the day. People can start ordering after they get a message that the kitchen
is open. They can then specify a delivery window in which they’d like to receive the food. It
places its meals directly from its kitchen onto delivery trucks that get them to customers.
However, it needs to plan very carefully for demand in order to avoid the waste that occurs if
a meal is placed on a delivery truck but there isn’t enough demand, or more demand comes in
than what a delivery truck serving a specific area has available. By allowing its customers to
place pre-orders, it can predict demand accurately, manage supply accordingly, optimize
delivery schedules, and reduce waste. They even have an order-on-the-go option for dinner.
Allocation: The decision to allocate a particular order to a driver can happen in two ways:

1. The order is automatically allocated to the nearest driver

2. The order is automatically allocated to the driver in whose zone the customer lies

Manual – some admin involvement

1. The order is routed through the admin to the driver closest to the customer
2. The order is routed through the admin to the driver who has the packed meals requested
for by the customer. This happens in case a driver rejects a request due to non availability
of a meal.

Delivery: Delivery is through drivers employed by the company. Each driver is given a set
number of packed meals and order requests are routed to each driver automatically/manually
by the admin. Based on the following factors, a driver chooses where to deliver first :

1. First Come, First Serve : Preference will go to the customers who ordered first.

2. Location Based : Customer nearest to the driver will be serviced first.

BUSINESS MODELS