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Adding delivery to a restaurant can bring more sales - reaching customers who want to eat at home - but it also brings costs that eat into the extra revenue: platform commissions, packaging, and a kitchen worked harder. Whether it pays depends on weighing the added revenue against the added costs. Here is the economics of adding delivery to a restaurant.
The short answer
Adding delivery to a restaurant - offering the food for delivery, usually through a delivery platform - can bring more sales, by reaching customers who want to eat at home rather than dine in, expanding the restaurant's reach beyond its dining room. This extra revenue is the appeal of adding delivery. But delivery also brings costs that eat into that extra revenue, so the economics depend on weighing the added revenue against the added costs. The main added costs are: Platform commissions - delivery platforms (the apps that take the orders and arrange the delivery) charge a commission, typically a significant percentage of each order, so a large cut of the delivery revenue goes to the platform, substantially reducing what the restaurant keeps from each delivery order. Packaging - delivery requires packaging to get the food to the customer, an added cost per order that dine-in does not have. And a harder-worked kitchen - delivery adds to the kitchen's workload (more orders to produce), which means the kitchen works harder, adding to its load, and to the wear, extraction load and cleaning needs that come with more cooking. There are also the practicalities of producing food that travels well (which not all dishes do) and managing the delivery orders alongside dine-in. So adding delivery brings extra revenue but also these extra costs - the commissions above all, plus packaging and the harder-worked kitchen - and whether it pays depends on whether the added revenue exceeds the added costs. This is not automatic: the platform commission in particular takes such a significant cut that a delivery order can be much less profitable than a dine-in one, so the extra sales have to be enough, at the reduced margin, to more than cover the added costs. For some restaurants, delivery adds worthwhile profitable revenue; for others, the commissions and costs erode the margin so much that it adds little or even loses money. So the economics of adding delivery come down to whether the added revenue, at the delivery margin (after commissions and costs), exceeds the added costs including the kitchen's increased load - which has to be weighed for the specific restaurant, rather than assumed to pay. Delivery is more sales, but at a lower margin and higher cost, so whether it pays is a real calculation.
Key points
The appeal
The appeal of adding delivery to a restaurant is more sales - reaching customers who want to eat the restaurant's food at home rather than dine in. Delivery expands the restaurant's reach beyond its dining room, to the growing number of customers who order food to eat at home, so it can bring extra revenue from a customer base the restaurant could not serve with dine-in alone. This is the attraction: delivery adds a sales channel, potentially bringing in orders and revenue on top of the dine-in business. For a restaurant with capacity to produce more, delivery can use that capacity to generate additional sales, which is why many restaurants add it.
So the revenue side of adding delivery is the extra sales it can bring - a real potential benefit. But the economics of delivery are not just about the extra revenue; they depend on the costs that come with it, because delivery is not free extra revenue - it brings significant added costs that eat into the extra sales. So whether adding delivery pays is not simply a matter of the extra revenue it brings, but of whether that extra revenue exceeds the extra costs. This is the key to the economics: delivery adds revenue, but also adds costs, so the question is the balance between them. The appeal (more sales) is real, but it has to be weighed against the costs (commissions, packaging, harder-worked kitchen) to know whether delivery actually pays. So the sections below cover the added costs - the commissions above all, plus the packaging and the harder-worked kitchen - because those are what determine, against the added revenue, whether delivery is worth it. The extra sales are the upside; the added costs are what they have to exceed. Understanding both sides is the basis for the economics of adding delivery.
Commissions and packaging
The biggest added cost of delivery, for most restaurants, is the platform commission. Delivery platforms - the apps that take the orders and arrange the delivery - charge the restaurant a commission on each order, typically a significant percentage of the order value. This means a large cut of the delivery revenue goes to the platform, substantially reducing what the restaurant keeps from each delivery order. So a delivery order through a platform brings in revenue, but the restaurant keeps considerably less of it than a dine-in order, because the commission takes a significant share. This is the central fact of delivery economics: the platform commission takes such a significant cut that a delivery order is much less profitable than a dine-in one of the same value - so the extra sales come at a much lower margin. For a restaurant relying on delivery platforms, the commission is the dominant cost eating into the delivery revenue.
Packaging is another added cost. Delivery requires packaging to get the food to the customer - containers, bags, and so on - which is an added cost per order that dine-in (using the restaurant's own crockery) does not have. So each delivery order carries a packaging cost, adding to the costs that reduce the margin on delivery. While packaging is a smaller cost than the commission, it is a real per-order cost that dine-in avoids, further reducing the delivery margin. Together, the commission and packaging are direct costs that eat into the delivery revenue - the commission taking a large share, and the packaging adding a per-order cost - so that the restaurant keeps significantly less from a delivery order than the order value, and less than it would from an equivalent dine-in sale. So the commissions and packaging are the direct added costs of delivery that reduce its margin, with the commission being by far the larger. These costs are why delivery revenue is not free extra revenue but revenue at a reduced margin - which is central to whether delivery pays. The extra sales have to be enough, at this reduced margin, to be worthwhile after the commission and packaging take their share.
The harder-worked kitchen
Beyond the direct costs of commission and packaging, delivery brings a less obvious cost: a harder-worked kitchen. Delivery adds to the kitchen's workload - the delivery orders are additional to the dine-in orders, so the kitchen produces more food - which means the kitchen works harder. This added workload has costs: more staff time and effort to produce the extra orders, more use of the equipment, and more wear on the kitchen from the increased production. So the extra revenue from delivery comes with extra work and wear in the kitchen, which is a real cost even if it is less direct than the commission and packaging. The increased cooking also has implications for the kitchen's extraction and cleaning.
The extra cooking generates more heat, grease and fumes, so the extraction has more to remove - a heavier load - and accumulates grease faster, so it needs cleaning more often (the grease build-up being a fire risk). And the harder-worked kitchen accumulates soiling faster, so it needs cleaning more to stay hygienic. So adding delivery increases the kitchen's extraction load and its cleaning needs, as part of the harder-worked kitchen - costs that come with the added production. These are real costs of delivery: the extra production wears the kitchen and its equipment more, loads the extraction more (needing more cleaning to manage the fire risk), and needs more cleaning to stay hygienic - all adding to the cost of the delivery business. So the harder-worked kitchen is a genuine cost of adding delivery, on top of the commissions and packaging - the increased production bringing more work, wear, extraction load and cleaning. This means the full cost of delivery includes not just the visible commission and packaging but the increased load on the kitchen, which adds to the running and maintenance costs. So when weighing whether delivery pays, the harder-worked kitchen - and its increased extraction and cleaning needs - is part of the added cost to account for, alongside the direct commission and packaging costs. The kitchen doing more means it costs more to run and maintain, which is part of the economics.
Does it pay
So whether adding delivery pays depends on whether the added revenue exceeds the added costs - the commissions, the packaging, and the harder-worked kitchen (including its increased extraction and cleaning) - which has to be weighed for the specific restaurant. This is not automatic, because the added costs are significant, above all the platform commission, which takes such a large cut that a delivery order can be much less profitable than a dine-in one. So the extra sales from delivery have to be enough, at the reduced delivery margin (after the commission and packaging), to more than cover the added costs (including the harder-worked kitchen) - which they may or may not, depending on the restaurant. So delivery is not automatically profitable extra revenue; it is extra revenue at a lower margin and higher cost, whose profitability depends on the balance.
For some restaurants, delivery adds worthwhile profitable revenue - the extra sales, even at the reduced margin, more than cover the added costs, so delivery contributes profit and uses spare capacity well. For others, the commissions and costs erode the margin so much that delivery adds little profit, or even loses money (if the added costs exceed the added revenue at the delivery margin) - so it may not be worth it, or may need rethinking (reducing the commission dependence, adjusting the menu or pricing for delivery). So the economics of adding delivery vary by restaurant, and have to be calculated rather than assumed: does the added revenue, at the delivery margin, exceed all the added costs, including the harder-worked kitchen? This calculation - weighing the extra sales against the commission, packaging and increased kitchen costs - is how to judge whether delivery pays for a given restaurant. And the harder-worked kitchen part of it connects to the kitchen's maintenance: adding delivery increases the extraction load and cleaning needs, so those increased costs (more frequent extraction cleaning, more deep cleaning) are part of the added cost to weigh, and part of keeping the harder-worked kitchen safe and hygienic under the increased load. So the economics of adding delivery come down to weighing the added revenue against all the added costs - commissions, packaging, and the harder-worked kitchen with its increased extraction and cleaning - for the specific restaurant, to see whether the extra sales, at the delivery margin, make it worthwhile. Delivery is more sales, but at a lower margin and higher cost, so whether it pays is a real calculation, not a given.
The takeaway
Adding delivery to a restaurant can bring more sales - reaching customers who want to eat at home, expanding the restaurant's reach beyond its dining room - which is the appeal. But delivery also brings costs that eat into that extra revenue: platform commissions (the delivery apps taking a significant percentage of each order, substantially reducing what the restaurant keeps - the biggest cost), packaging (an added per-order cost dine-in avoids), and a harder-worked kitchen (the extra orders meaning more cooking, wear, extraction load and cleaning). So delivery is not free extra revenue but revenue at a lower margin and higher cost - the commission above all making a delivery order much less profitable than a dine-in one.
So whether adding delivery pays depends on whether the added revenue exceeds the added costs - the commissions, packaging, and harder-worked kitchen (including its increased extraction and cleaning needs) - which has to be weighed for the specific restaurant. This is not automatic: the extra sales have to be enough, at the reduced delivery margin, to more than cover all the added costs. For some restaurants, delivery adds worthwhile profitable revenue; for others, the commissions and costs erode the margin so much that it adds little or loses money. So the economics of adding delivery come down to a real calculation - the added revenue at the delivery margin against all the added costs, including the harder-worked kitchen - rather than an assumption that more sales means more profit. And the harder-worked kitchen part connects to maintenance: the increased extraction load and cleaning needs are both a cost to weigh and a requirement for keeping the busier kitchen safe and hygienic. So delivery is more sales, but at a lower margin and higher cost - whether it pays is a calculation worth doing before assuming it will.
Questions
More sales - by reaching customers who want to eat the restaurant's food at home rather than dine in. Delivery expands the restaurant's reach beyond its dining room to the growing number of customers who order food to eat at home, so it can bring extra revenue from a customer base the restaurant could not serve with dine-in alone. For a restaurant with capacity to produce more, delivery can use that capacity to generate additional sales. So the appeal of adding delivery is the extra sales it can bring - a real potential benefit. But delivery is not free extra revenue: it brings significant added costs (commissions, packaging, a harder-worked kitchen) that eat into the extra sales. So whether adding delivery pays depends not just on the extra revenue but on whether that revenue exceeds the added costs - the balance between them being the key to the economics.
Because they take a significant cut of each order, substantially reducing what the restaurant keeps. Delivery platforms - the apps that take the orders and arrange the delivery - charge the restaurant a commission, typically a significant percentage of the order value, so a large share of the delivery revenue goes to the platform. This means a delivery order through a platform brings in revenue, but the restaurant keeps considerably less of it than a dine-in order - so the extra sales come at a much lower margin. This is the central fact of delivery economics: the commission takes such a significant cut that a delivery order is much less profitable than a dine-in one of the same value. So the platform commission is the biggest cost eating into delivery revenue, and the main reason delivery is extra revenue at a reduced margin rather than free extra profit. The extra sales have to be enough, at this reduced margin, to be worthwhile after the commission takes its share.
It works the kitchen harder - the delivery orders are additional to the dine-in orders, so the kitchen produces more food, meaning more staff time and effort, more use of the equipment, and more wear from the increased production. This harder-worked kitchen has costs, including for the extraction and cleaning: the extra cooking generates more heat, grease and fumes, so the extraction has a heavier load and accumulates grease faster (needing cleaning more often to manage the fire risk), and the harder-worked kitchen accumulates soiling faster (needing more cleaning to stay hygienic). So adding delivery increases the kitchen's extraction load and cleaning needs, as part of the harder-worked kitchen - real costs that come with the added production. So the full cost of delivery includes not just the commission and packaging but the increased load on the kitchen, which adds to the running and maintenance costs - a genuine part of the economics to account for.
No - whether it pays depends on whether the added revenue exceeds the added costs, which is not automatic. The added costs are significant, above all the platform commission, which takes such a large cut that a delivery order can be much less profitable than a dine-in one - so the extra sales have to be enough, at the reduced delivery margin (after commission and packaging), to more than cover the added costs (including the harder-worked kitchen). For some restaurants, delivery adds worthwhile profitable revenue (the extra sales more than cover the added costs); for others, the commissions and costs erode the margin so much that it adds little profit or even loses money. So delivery is not automatically profitable - it is extra revenue at a lower margin and higher cost, whose profitability depends on the balance for the specific restaurant. So whether delivery pays is a real calculation - weighing the added revenue against all the added costs - not a given.
Weigh the added revenue against all the added costs, for your specific restaurant. On the revenue side, estimate the extra sales delivery would bring. On the cost side, account for the platform commission (a significant percentage of each delivery order - the biggest cost), the packaging (a per-order cost), and the harder-worked kitchen (the extra staff time and equipment use, plus the increased extraction load and cleaning needs from the added cooking). The key question is whether the extra sales, at the delivery margin (after commission and packaging), more than cover all the added costs (including the increased kitchen costs). If they do, delivery adds worthwhile profit; if they do not, it adds little or loses money. So the calculation is the added revenue at the delivery margin against all the added costs - which has to be worked out for your restaurant rather than assumed. Because the commission takes such a cut, the extra sales need to be substantial to make delivery pay, so it is worth calculating carefully before assuming it will.
Yes - the harder-worked kitchen's increased extraction and cleaning needs are part of the added cost of delivery to account for. Adding delivery increases the cooking, which loads the extraction faster (needing more frequent cleaning to manage the grease fire risk) and soils the kitchen faster (needing more cleaning to stay hygienic) - so the increased cleaning and extraction cleaning are a real cost that comes with the added delivery production. So when weighing whether delivery pays, these increased maintenance costs are part of the added cost, alongside the commission and packaging. And beyond the economics, the increased extraction load and cleaning needs are a requirement for keeping the busier kitchen safe and hygienic under the greater load - the harder-worked kitchen needing more attention to its extraction and cleaning to stay safe. So the increased cleaning need both factors into the economics (as an added cost) and matters for safety (keeping the busier kitchen in good order) - a genuine part of adding delivery to account for.
Adding delivery works the kitchen harder, loading the extraction faster and needing more frequent cleaning - our extraction and deep cleaning keep the busier kitchen safe and hygienic. Ask us about a clean.
