How to calculate delivery menu margins
Delivery profit is not the same as dine-in profit. Platform commission, packaging, payment fees, and discounts all reduce what you keep from each order.
Delivery margin is what a dish leaves you after commission, packaging and payment fees, which dine-in never charges. A dish at a healthy 30% food cost in the room can leave you almost nothing on a platform taking 30% of the same sale.
A menu item that is profitable dine-in can be underwater on delivery. The food cost percentage is the same either way. What changes is how much of the selling price you actually keep after the platform takes its cut.
Understanding delivery margin is not optional if you sell on DoorDash, Uber Eats, or Grubhub. It is how you decide which dishes to push on delivery, what delivery prices to set, and whether a platform is worth keeping at all.
The full delivery margin formula
Delivery profit = selling price minus recipe cost minus packaging minus platform commission minus payment fees minus discounts and promotions
Each of these elements deserves a number, not a guess.
A full worked example
A rice bowl sells for $14.00 on delivery. Here is the full breakdown:
- Recipe cost (ingredients + prep): $3.80
- Packaging (container, bag, utensils): $0.85
- Promotional discount (10% weekend promo, your cost): $1.40, which drops the subtotal to $12.60
- DoorDash commission at 25% of $12.60: $3.15
- Payment processing fee: $0.35
Delivery profit: $12.60 minus $3.80 recipe cost minus $0.85 packaging minus $3.15 commission minus $0.35 payment fee = $4.45
Delivery margin: $4.45 divided by the $14.00 menu price = 31.8%
The same rice bowl dine-in at $12.00 with no packaging or commission earns $12.00 minus $3.80 = $8.20 gross profit, nearly twice as much per sale.
Platform commission rates
Commission rates vary by platform and contract tier, and they change: see "DoorDash, Uber Eats, and Grubhub commission: what restaurants actually pay" for the current, dated rate breakdown on each platform. Always use your actual contract rate. Published ranges are starting points, not what you are paying.
Packaging costs add up
Delivery packaging (insulated bags, sealed containers, side containers, utensils) costs meaningfully more than dine-in serviceware. A full delivery order with soup, a main, a drink, and condiments can carry $1.50 to $2.50 in packaging alone.
If you are not measuring packaging cost per order, you are likely underestimating your delivery cost by $1 to $2 per transaction.
Should delivery prices be higher than dine-in?
Yes, in most cases. Delivery customers are not surprised by delivery prices being 10 to 20% higher than dine-in. The platform UI makes the comparison harder and consumers accept a convenience premium.
Recovering the commission in full needs more than that, and this is the tension worth understanding rather than papering over. If commission is 25%, a dine-in price of $12.00 needs a delivery price of roughly $16.00 to hold the same gross profit, which is 33% up, not 20%. Most operators land somewhere between the two and accept a thinner delivery margin rather than a price the customer refuses.
How to decide if a platform is worth keeping
Calculate average delivery margin across your top 10 selling items on each platform. If the margin is consistently below 20%, the platform is consuming your profit. At that point you have three options: raise delivery prices, remove low-margin items from the delivery menu, or renegotiate your commission rate.
Platforms will sometimes negotiate, especially if your order volume is meaningful or if you threaten to leave.
Frequently asked questions
- Does DoorDash charge the restaurant or the customer for delivery?
- Both. The restaurant pays a commission (15 to 30% of the sale). The customer pays a delivery fee and often a service fee. These are separate charges.
- Should I have a different menu for delivery?
- Yes. Many operators remove low-margin items, items that travel poorly, or items that require expensive packaging from their delivery menu. A smaller, optimized delivery menu often earns more profit per order than the full dine-in menu.
- What is a healthy delivery margin?
- Most operators target 20 to 30% gross delivery margin (before labor and overhead). Below 15% means the platform is taking too much of the sale for the arrangement to be sustainable.
- Do I need different prices on each platform?
- Not necessarily, though it is allowed. Many operators set one unified delivery price higher than dine-in and use it across all platforms. Others optimize per platform based on commission differences.
- How does a discount or promo affect my margin?
- Discounts you fund come directly out of your delivery profit. A 10% off promotion on a $14 sale that you pay for drops the subtotal to $12.60, and the commission is then charged on that $12.60, not on the original $14. You still lose the $1.40 outright, so the promotion costs you the discount plus the margin you would have made on it.
Read the transcript
An app takes 30% of the order. That is the top tier on both of the big ones. So you add 30% to your delivery prices, and you are square again, right? You are not. And the gap is bigger than almost anyone expects.
Here is a pad thai. $12 on your menu. The food in it costs $3.90. So dine in, you keep $8.10. Hold on to that number, because everything from here is about whether delivery gets you back to it.
First, listed on the app at the same $12. The app takes 30%, which is $3.60. You keep $8.40. Out of that comes the food, $3.90, and the packaging, $0.60. Your profit is $3.90. You were making $8.10. Same dish, same price, less than half the money.
So put the price up. 30% on $12 is $15.60. But now the app takes 30% of $15.60, which is $4.68. Not $3.60. That is the part people miss. The commission comes off the new price too. You keep $10.92, and after food and packaging, your profit is $6.42. Better. Still $1.68 short of dine in.
To actually get back to $8.10, the price is $18. That is 50% up, not 30. Because you do not multiply by what they take. You divide by what you keep. They take 30%, so you keep 70. Your costs, plus the profit you want, divided by 70%. That is $18.
And that is the real answer, $18 for a pad thai on an app. Some kitchens can charge that, most cannot, which makes this a listing decision, not a pricing one. The dishes that work on delivery are the ones with room in them, and it is usually not the cheap one you are proudest of.
So before you put your menu on an app, cost it per channel. Dine in, takeaway, delivery, with the commission and the packaging in. Some dishes will be fine, some will be a lot worse than you think. You can do that free at dishboard.co. No card. And if this was useful, subscribe.
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