The short version
If your delivery orders have margins under 10–15% after commissions and packaging, they're likely killing profit. Track per-order contribution and compare to in-house—anything below $5 net per order is a red flag.
The real math: delivery cost breakdown
Break it down per order using 2026 averages:
- Commission: 20–30% ($4–$6 on a $20 order).
- Packaging: $1–$2 per order (bags, containers, seals).
- Food cost: 30–35% ($6–$7 on $20).
- Labor bump: $1–$2 (extra handling, errors).
Total hidden costs: $12–$17 per $20 order. Net profit? Often $3 or less—worse if you subsidize promos.
Example: $20 order - $6 commission - $1.50 packaging - $6 food cost = $6.50 left. Subtract labor/ops = real margin.
Signs delivery apps are killing your profit
Watch for these patterns in your data:
1. Low per-order net
- Under $5 contribution after all costs? You're subsidizing the apps.
- Busy delivery nights but flat/negative cash flow.
- High voids/comps on delivery (errors eat margin).
2. Menu mix issues
- Delivery favors low-margin items (e.g., salads over steaks).
- Over 40% of sales from delivery? Margins dilute overall.
- Packaging waste spiking food cost by 2–5%.
3. Operational red flags
- Staff overwhelmed during peaks—leads to mistakes and burnout.
- Customer complaints on cold/late food hurting reviews.
- Apps pushing promos that force you to eat the discount.
4. Hidden fee creep
- Effective commission over 25% after add-ons.
- Increasing refunds/chargebacks from delivery issues.
- No pricing uplift—delivery menu same as in-house.
Quick delivery profit audit
Run this check in under 30 minutes with last month's data:
Step 1: Pull order-level data
- Total delivery sales vs. commissions paid (from app portals).
- Average order value and item mix.
- Packaging invoices and waste logs.
Step 2: Calculate true margin
- (Sales - commissions - packaging - food cost) / sales = delivery %.
- Compare to in-house (aim for delivery at least 80% of dine-in margin).
Step 3: Test fixes
- Price delivery menu 10–15% higher.
- Limit low-margin items on apps.
- Track with our Delivery Margin Calculator.
How to fix delivery without ditching the apps
Turn delivery from a drain to a driver with targeted tweaks:
- Optimize menu. Push high-margin items with photos/descriptions—apps love visuals.
- Negotiate commissions. If you're high-volume, push for 15–20% rates.
- Add fees smart. $1–$2 delivery upcharge covers packaging without scaring guests.
- Track everything. Use waste logs and inventory sheets to spot leaks early.
Grab the Third Party Delivery Fees template from our templates page for a full management checklist.
Where the RPS tools plug in
Auditing delivery once is easy. Keeping it profitable as fees rise? Our stack handles the heavy lifting:
- Delivery Margin Calculator: Plug in your commissions and costs for per-order breakdowns.
- Contribution Margin Tracker: See which delivery items actually make money.
- Prime Cost Calculator: Factor delivery into overall ops costs.
- Live Menu Engine service: Auto-adjust delivery prices as costs change—keeps margins honest.
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 last month's delivery reports. Run the margin math on your top 5 orders. If under 15%, hike prices 10% and track sales drop (usually minimal).
FAQs
How do I know if delivery apps are hurting my restaurant?
Run the math on 10 recent delivery orders. If your net margin (after commission, packaging, food cost, and labor) is under $5 per order or below 15%, you're likely losing money or barely breaking even. Compare to your dine-in margin—delivery should be at least 70-80% as profitable.
What's the biggest hidden cost with delivery apps?
Commission creep. The base 20-30% is just the start—add marketing fees, promotional costs you absorb, refunds for delivery errors, and the effective rate can hit 35-40%. Pull your actual payout statements, not just the quoted rates, to see the real number.
Should I stop using delivery apps if they're unprofitable?
Not necessarily. First try: raise app prices 10-15%, remove low-margin items, and negotiate better rates if you have volume. Many restaurants flip delivery from a loss to a profit center with pricing adjustments alone. Only pause if fixes don't move the needle after 30 days.
How much should I mark up prices on delivery apps?
10-20% over your in-house menu is standard. Customers expect delivery to cost more—they're already paying service and delivery fees. If you're running identical pricing, you're subsidizing every order. Test a 15% markup and track whether order volume drops (usually it doesn't).