Food delivery apps are saving $100,000 yearly by choosing cheap communication apps

Margins are slim in the food delivery business. Whether it’s a cloud kitchen like Food Court, a restaurant aggregator platform like Chowdeck, or a restaurant that handles its delivery, getting food to customers is pricey.

To build sustainable businesses, food delivery apps expand revenue streams and keep operational costs low. Startups like Chowdeck, Glovo, and HeyFood have expanded beyond restaurants to onboard malls and local markets. Beyond growing revenue, these companies keep an eye out for cost-saving opportunities.

In 2023, one food delivery platform saved over ₦40 million monthly in operational expenses by moving its drivers off the work messaging app Slack. Over 1,000 of the company’s drivers communicated with supervisors on Slack.

While it’s unclear exactly how much the company paid, the cheapest plan on Slack costs $8.75 per user monthly.  If the startup used the Pro plan, back-of-the-napkin math suggests a monthly fee of $11,000 and $136,500 annually for the 1,300 drivers it had at the time.

“We were adding new drivers by the day,” a rider supervisor at the startup told TechCabal. “I think that is why we moved the drivers off Slack.”

Their current rider count nearly tripled, and communication costs on the same plan would have hit over $26,000 monthly and about $315,000 annually. This is a nightmare for a venture-backed startup earning naira revenue.

The company eventually moved to Zoho Cliq in mid-2023, one person familiar with the matter said.

Zoho Cliq bills ₦864 per user, translating to a monthly cost of ₦1.1 million and ₦13.4 million annually for 1,300 drivers.

The change has gone unnoticed among drivers who use the apps to communicate with supervisors.

“Now, only rider supervisors are on Slack,” the supervisor said.

“[On Zoho] we have channels based on regions, and it works well for communication,” said one delivery rider in the Gbagada area. His channel on Zoho Cliq has about 200 other riders.

Riders also use WhatsApp to communicate when app responses are delayed, share problems encountered during delivery, make leave requests, etc. These WhatsApp groups are according to zonal operations, just like their channels on Zoho Cliq.

Despite these operational adjustments, the food delivery startup’s driver communication spending dwarfs that of its competitors. For instance, another competitor’s over 2,000 delivery drivers use the free social platform Telegram for communication in addition to the customer support messaging on the delivery app.

“If we need to voice personal concerns related to work, we can also speak to our supervisors in person,” Emmanuel, the rider, told TechCabal.

Although relatively expensive compared to competing startups, the company boasts that each delivery is profitable. “We are not the cheapest food delivery service, but we are the most efficient,” an executive at the company once boasted.