Online food delivery is growing at a rapid pace, with revenue in the sector projected to reach US$40.64bn in 2023 as consumers embrace the convenience and flexibility of online platforms.
As the market evolves, food delivery platforms will need to adapt their approach to stand out. One of the most promising options is offering financing solutions to merchants, creating a sticky product offering and supporting their customers through economic volatility.
To date, YouLend has worked with a number of leading food delivery platforms to offer embedded finance solutions. In this blog, we take the learnings to provide you the best roadmap to offering world-class embedded financing solutions.
Download the guide: Embedded finance for food delivery platforms -> A new opportunity
Why do restaurants need business financing?
In recent years, the move to online delivery has been a game changer for restaurants - allowing them to serve more customers, try new business models and adopt more efficient service delivery. But this shift also brings new challenges such as:
- High Operational Costs: The surge in restaurant reliance on food delivery platforms is straining their ability to manage cash flow, inventory, and daily operations, intensifying financial pressures.
- Daily Cash Flow Regulation: The restaurant industry is highly vulnerable to economic shifts. Fluctuations in order payouts, consumer spending and seasonal variations can severely restrict cash flow, making financial stability a struggle.
- Staffing Challenges: As their business grows, they are constantly looking to hire more delivery riders and restaurant staff to keep up with growing demand.
- Rising Overhead Costs: Small and medium-sized restaurant partners face a perfect storm of rising utility bills, supply chain disruptions, and soaring raw material prices. As their dependency on delivery platforms grows, they must become more agile and adaptable to survive these relentless economic headwinds.
Why should food delivery platforms offer embedded finance solutions?
Embedded finance solutions create a win-win for food delivery platforms; enhancing their product-suite with a service that makes a tangible impact to their top-line revenue, as well as nurturing customer loyality with a sticky, value-add product that can differentiate them in the market.
In our work with leading platform businesses, we have seen:
- Increase in merchant LTV by 6%
- Improve merchant GMV by 26%
- Boost merchant core sales by 36%
How to get started
While it is possible to simply use in-house resources to build your own embedded finance solution, an external partner or white-label provider can provide a faster route to market and reduce risk.
Wondering whether to buy or build your embedded finance solution? Check out our in-depth whitepaper.
When assessing partners, it’s important to ensure they match the needs of your business model, your customers and the pain points you’re trying to solve. Working with the right embedded finance provider can offer:
- Reliable service: Choosing a tried and tested technology partner ensures you can offer the service your customers need from day one, particularly when it comes to a quick application and decision process, providing flexibility and security for merchants.
- Reduced implementation risk: Specialist providers can help manage the scoping, technology, and implementation process to ensure that the process is completed on time and on budget, with all necessary functionality and safeguards.
- Specialist compliance expertise: Financial services require additional compliance considerations for data security, underwriting and consumer information – falling behind on these can lead to steep penalties from regulators. Working with a partner helps platforms address specific requirements to reduce risk and accelerate implementation.
- Scaling support: Embedded finance systems should be ready to scale with your business, delivering a consistent customer experience for every user as your platform grows.
A look into go-to-market with YouLend
YouLend is the embedded finance solution partner for leading platform businesses, including food delivery businesses such as JustEat and Foodhub. These businesses rely on our embedded finance platform to help them adapt faster, tailor their customer experiences and reduce risk when it comes to offering embedded finance services including:
- Rapid time to market: YouLend helps platforms go live with embedded financial services via hosted financing pages in just 7 days.
- Customer-focused fees: YouLend works with multiple capital sources to offer the most competitive pricing for merchants while offering higher levels of commission for platforms on each and every funding, with payments managed as a portion of revenue.
- Limited development required: YouLend’s no-code platform works with a single API connection, fully white-labelled with no development resource required.
To learn more about how to start offering embedded finance solutions on your food delivery platform, book a demo or read our partner case studies here.
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