Delivery Margin Optimization

Why Am I Losing Money On Delivery Orders?

Delivery apps promise volume, but hidden commissions (25–30%), packaging costs ($1–$2/order), and low-ticket items eat your margin alive. Fix it with 2025 delivery math that actually adds up.

RPS Guide • Built for operators who actually run the shift
Reading time: about 6 minutes
Delivery & Margin Optimization

The short version

You're losing on delivery because commissions and packaging wipe out 30–40% of the ticket before food cost even hits. Aim for $8+ average item value and 20%+ margins per order to break even in 2025.

Delivery isn't "extra sales"—it's a separate business with its own cost structure. Treat it like one, or watch it bleed your dine-in profits dry.

The real math: delivery cost breakdown

Forget app hype. Here's what a $20 delivery order really costs in 2025:

  • Food cost: $5–$7 (25–35% target).
  • Packaging: $1–$2 (bags, containers, seals).
  • App commission: $5–$6 (25–30% on most platforms).
  • Labor to pack/fulfill: $1–$2.

Total hidden costs: $12–$17. You're left with $3–$8 before overhead—often a net loss on small orders.

Example: $20 ticket - $6 commission - $6 food - $2 pack/labor = $6 gross. Subtract 10% waste/variance = $5.40 net (27% margin).

Factors killing your delivery margins in 2025

Inflation hits delivery harder—here's why orders that look busy still lose money:

1. Commission creep

  • Base fees: 25–30% on DoorDash/Uber Eats.
  • Hidden adds: Regulatory fees (2–5%), promo stacking.
  • In-house delivery: Driver pay + insurance eats 15–20%.

2. Order size traps

  • Low-ticket items: Apps push $10–$15 orders that barely cover costs.
  • No upsells: Guests skip drinks/sides online (down 20–30% vs in-house).
  • Free delivery promos: You eat the $3–$5 driver fee.

3. Packaging and waste

  • Single-use costs: $1.50 average per order (up 15% in 2025).
  • Over-packing: Extra bags for "safety" add $0.50–$1.
  • Comps/refunds: Delivery errors spike voids 2–3x dine-in.

4. Operational leaks

  • Idle labor: Staff waiting on pickups during slow hours.
  • Menu mismatch: High-cost items travel poorly, leading to waste.
  • No tracking: Without per-order margins, losses hide in averages.

Quick delivery margin audit

Spot your leaks in under 10 minutes with last week's data:

Step 1: Calculate true order cost

  • Pull 10 delivery tickets—add food + packaging + commission.
  • Factor labor: $15/hour staff x 5 min/order = $1.25.
  • Use our Contribution Margin Calculator for the full picture.

Step 2: Set your break-even

  • Target 20–25% net margin per order.
  • Minimum ticket: $25–$30 to cover fixed costs.

Step 3: Test fixes

  • Upcharge 10–15% on delivery menu.
  • Bundle high-margin add-ons (drinks at $3+ profit).
  • Track in your Menu Engineering matrix.

How to stop losing on delivery without killing volume

Flip delivery from a loss leader to a profit center with operator-tested moves:

  • Delivery-only pricing. Add $1–$2 per item—guests expect it, and it covers commissions.
  • Menu curation. Cut low-margin travelers; push bundles that hit $8+ per item.
  • Own your channel. Build in-house with loyalty perks to dodge 30% fees.
  • Track everything. Use waste logs and inventory sheets to catch packaging overuse.

Grab the Delivery Pricing Checklist from our templates to map your fixes.

Where the RPS tools plug in

Delivery math gets messy fast. Our stack keeps it clean and current:

  • Contribution Margin Calculator: Break down per-item delivery profits from our calculators page.
  • Inventory PAR Builder: Set smart stock levels for delivery spikes without over-buying.
  • Menu Engineering Matrix: Spot which delivery items are dogs dragging margins down.
  • Live Menu Engine service: Auto-adjusts delivery prices as fees and costs change.

If you’re comparing DIY spreadsheets and live menu pricing to the big all-in-one restaurant platforms, our Us vs Them page breaks down why Restaurant Profit Systems is different.

For beginners, start with our fillable templates like the Delivery Pricing Checklist. Ready for pro-level? Dive into the calculators in The Vault.

Simple next step for this week

Pull last month's delivery reports. Calculate average margin per order. Under 20%? Cut 5 low-performers and add one high-margin bundle.

Open Contribution Margin Calculator Get Delivery Checklist See Live Menu Engine

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FAQs

What's the real cost of a delivery order?

On a $20 order, expect to lose $12-17 before you see profit: $5-7 food cost, $5-6 app commission (25-30%), $1-2 packaging, and $1-2 labor to pack. That leaves $3-8 gross—often a net loss on orders under $25.

Should I charge more for delivery than dine-in?

Yes. Most operators add 10-15% to delivery menu prices to offset commissions and packaging. Customers expect it—they're already paying delivery fees. If you're running the same prices as dine-in, you're subsidizing every order out of pocket.

What's the minimum order size to break even on delivery?

Typically $25-30 depending on your food cost and commission rate. Below that, the fixed costs (packaging, labor, commission minimums) eat too much of the ticket. Set order minimums or bundle deals to push average tickets above break-even.

Is in-house delivery more profitable than third-party apps?

It can be—you trade 25-30% commission for driver wages, insurance, and vehicle costs (usually 15-20% of ticket). The math works if you have enough volume to keep drivers busy. Under 30-40 deliveries per shift, the fixed costs hurt more than commissions.