The short version
Most restaurants lose 5-15% on delivery after fees. Aim for at least 15% net margin per order—use the calculator to plug in your commissions (20-30%), packaging ($1-2), and food cost (25-35%) for real numbers.
The real math: delivery margin breakdown
Forget gross sales. True delivery margin = (order total - food cost - fees - packaging - labor allocation) / order total.
- Commissions: 20-30% ($4-6 on a $20 order).
- Packaging: $0.50-2.00 per order.
- Food cost: 25-35% ($5-7 on $20).
- Labor bump: $1-3 for handling/packing.
Total deductions: $10-18 on a $20 order. Left with $2-10? That's your margin—10-50%, but aim low end is a loss after overhead.
Example: $20 order - $6 food - $5 commission - $1.50 pack - $2 labor = $5.50 profit / $20 = 27.5% margin.
Factors that tank your delivery margins in 2026
Delivery apps are evolving, but costs are sticky—here's what to watch:
1. Platform fees and tiers
- Basic: 20-25% commission.
- Premium visibility: +5-10% effective rate.
- Self-delivery hybrid: Lower fees but add driver costs.
2. Order size and mix
- Small orders ($15-20): High % fees kill margin.
- Large/group: Better, but more packaging/labor.
- High-cost items: Proteins amplify food cost hits.
3. Hidden costs
- Refunds/errors: 5-10% of orders eat profit.
- Peak hour labor: Overstaffing for rush adds $2-5/order.
- Inflation: Packaging up 10%, food up 5-8% YoY.
4. Pricing strategy
- In-app markup: +10-20% over in-house to cover fees.
- Free delivery thresholds: Boost volume but crush small orders.
- Menu exclusives: High-margin items only for delivery.
Quick delivery margin audit
Pull last week's data and run it in 10 minutes:
Step 1: Gather per-order basics
- Total sales, food cost from POS/inventory.
- Fees from app statements.
- Packaging/labor estimates (use our templates for tracking).
Step 2: Set benchmarks
- Target: 15-25% net after all deductions.
- Break-even: Under 10%? You're losing on volume.
Step 3: Calculate and optimize
- Plug into our Delivery Margin Calculator.
- Tweak: Raise prices 5-10%, cut low-margin items.
- Track weekly in Menu Engineering matrix.
How to boost delivery profits without ditching apps
Margins improve when you treat delivery as its own P&L:
- Menu optimize. Delivery-only items with 20-25% food cost (apps, salads over steaks).
- Price tier. In-app +15%, bundles to lift average order $5-10.
- Fee offsets. Add $1-2 "service fee" or bundle packaging.
- Volume caps. Limit orders during peak to avoid labor bloat.
Use the Third-Party Delivery Checklist from our templates to audit your setup.
Where the RPS tools plug in
One calculator is a start. The full system keeps margins honest across channels:
- Delivery Margin Calculator: Plug in real numbers for per-order and menu-wide insights.
- Menu Costing Spreadsheet: Auto-adjust prices as fees or costs change.
- Prime Cost Calculator: Factor delivery labor into your overall targets.
- Live Menu Engine service: We automate pricing across in-house, delivery, and apps.
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.
Simple next step for this week
Pull 10 delivery orders from last shift. Run them through the calculator. If average margin under 15%, markup 3 low performers and test.
FAQs
Why do delivery orders hurt profit?
High commissions and packaging costs.
What is delivery margin?
Profit left after delivery fees and food cost.
How do I improve delivery profits?
Adjust delivery pricing and menu mix.