July 14, 2025
Online orders offer immense opportunities for growth, yet third-party platform fees, such as commissions and delivery charges, relentlessly cut into your hard-earned profits. These escalating costs make it increasingly difficult for restaurants to stay competitive and keep prices reasonable, especially when margins are already razor-thin.
Studies reveal that a significant 60% of restaurants fail in their first year of operation, and 80% close within five years of opening. These alarming statistics underscore how high operating expenses, particularly commission and delivery fees, directly erode profitability, often being a major cause of failure.
To increase your profitability, choosing the right food delivery service is essential. It's not just about expanding your customer base; it's about maximizing your profits and maintaining crucial control over your business.
We understand these challenges. That's why we've created this comprehensive guide: to help you select delivery services that offer the lowest rates, significantly reducing your overhead and directly boosting your bottom line.
Food delivery services are platforms that facilitate the process of ordering food from restaurants and having it delivered directly to customers' locations. These services have become a significant part of the modern dining experience, offering convenience to customers and expanding reach for restaurants.
With the growing trend of on-demand services, food delivery has become an essential business model for many restaurants, especially with the increasing demand for takeout and delivery options.
The process of food delivery is typically straightforward, but can vary slightly depending on the platform. Here's an overview of how it works.
When restaurants use third-party delivery, several fees impact the total cost. Knowing these charges is crucial for owners to assess if the platform is financially sustainable.
One of the biggest expenses for restaurants using third-party platforms is the commission fee, which usually ranges from 15% to 30% of the total order. The delivery service provider earns this fee for each order they handle through their platform. Although this fee provides access to a ready customer base, it often takes a large part of the restaurant's profit.
Delivery fees are another common expense, usually charged to either the restaurant or the customer. These fees can differ based on distance, order size, or time of day. Typically, restaurants pass these fees to customers, but sometimes they cover them themselves, especially in competitive markets. Either way, it affects the bottom line.
Besides the commission and delivery fees, many delivery services also charge service fees, which are either fixed amounts or a percentage of the order. These fees cover administrative costs, platform maintenance, and customer support.
While they may seem small individually, when added up over multiple orders, they can become a significant financial burden.
To improve visibility and generate more orders, third-party platforms often provide paid marketing and promotional services. While these services can temporarily increase orders, they also add costs that can cut into profit margins.
Restaurants need to assess whether the rise in order volume justifies the extra marketing expenses.
Some platforms also charge a small fee to customers, while others require the restaurant to cover these fees. For those who pass delivery fees onto customers, it can affect the customer experience and the chance of repeat orders.
Restaurants need to balance the delivery fee burden to prevent customer dissatisfaction, especially in a competitive market.
When all these costs are added up, it's clear that third-party delivery services can significantly impact a restaurant's profitability. With commissions, delivery charges, service fees, and marketing costs accumulating, it becomes harder for restaurants to maintain healthy profit margins while providing affordable prices.
For many restaurants, these fees can account for as much as 30% of the total revenue from a delivery order.
Now, let's look into the key factors to consider while selecting a food delivery service for your restaurant.
Choosing the right food delivery service involves more than price. While affordability matters, other factors significantly impact your restaurant's operations, customer experience, and profitability. Consider these main factors when choosing a cost-effective delivery service.
A crucial aspect to examine is the way delivery fees are set up. Certain platforms impose a fixed fee per delivery, whereas others charge a percentage of the total order. Flat fees tend to be more predictable and simpler to handle, especially with high-value items, because they eliminate fluctuating costs.
On the other hand, fees based on a percentage can increase rapidly with larger orders, potentially reducing profit margins.
Here's a quick comparison between the two structures:
The quality of customer service from a delivery platform significantly influences your restaurant's overall experience and customer satisfaction. It's important to select a partner that provides prompt and reliable support to resolve any problems related to orders, payments, or delivery efficiently.
Poor customer service can lead to negative reviews, complaints, and lost clientele. Opt for services that are reputable and have a track record of handling customer issues effectively.
Seamless integration with your Point of Sale (POS) system is vital to prevent manual errors and ensure smooth order flow from the customer to the kitchen. Platforms that connect with your POS decrease the chances of missed or wrongly handled orders, boosting kitchen efficiency and accuracy.
Moreover, POS integration streamlines the accounting process by automatically recording all transactions, which makes tracking revenue and managing finances easier.
Third-party delivery services often control customer data, causing restaurants to lose insights into customer preferences and behaviors. This hampers relationship building and personalized marketing. Moreover, using these platforms can dilute the restaurant's brand identity.
To control customer relationships and branding, use services that collect customer data and showcase your brand during ordering. It boosts loyalty and personalizes marketing.
Now, let's explore the pricing structure of major delivery service providers to make a well-informed decision about the best options for your restaurant.
With many delivery services for restaurants, it's important to compare costs among major providers. Each has different fee structures, features, and services affecting your restaurant's profits.
Below, we will review the pricing models of some of the most popular food delivery platforms.
SkipTheDishes is one of the leading delivery platforms in Canada, known for its wide reach and fast delivery times. However, the commission fees can be substantial, often ranging from 20% to 30% of the total order value. Restaurants are also required to cover delivery and service fees, which vary depending on location and delivery distance.
DoorDash has become a dominant player in the delivery space, offering a range of pricing plans. Their commission fees are typically 20% to 30%, and they also charge service fees. DoorDash provides flexible delivery options, including integration with DoorDash Drive for restaurants that prefer using their delivery drivers.
Uber Eats, together with Postmates, provides a highly accessible platform with extensive coverage. Their fees are competitive, but the service fee can add up, especially for smaller restaurants. Uber Eats offers both percentage-based commissions and flat-rate options, depending on the restaurant's agreement.
Toast Takeout is a newer player that provides ordering solutions. Toast's pricing structure is typically more affordable, with lower commission fees than many competitors, and it integrates seamlessly with restaurant POS systems. It offers restaurants the ability to control their brand and customer relationships while maintaining competitive pricing.
Now, let's understand how iOrders provides a more cost-effective solution.
Although third-party delivery services can increase short-term sales, high commissions and recurring fees reduce profits over time, threatening long-term sustainability; iOrders offers solutions to minimize costs and enhance profitability.
iOrders offers a flexible, cost-effective delivery solution with its Delivery-As-A-Service model, where restaurants use their delivery team, like employed drivers, maintaining full control over delivery.
It acts as the tech layer, routing orders to the POS system and notifying the restaurant of delivery requests. This setup routes orders efficiently to the restaurant's POS system, allowing fulfillment using the restaurant's delivery staff without relying on third parties.
Restaurants can also integrate with third-party delivery partners like DoorDash Drive and Uber Direct, which handle logistics without charging commission fees. Instead, restaurants pay a flat fee per delivery, making costs more predictable.
iOrders' system ensures all deliveries are white-labeled, so customers see only the restaurant's branding, creating a consistent brand experience from order to delivery. It enables restaurants to use both delivery options without commission fees, keeping costs low, ensuring brand consistency, and operational efficiency.
With iOrders' Commission-free Online Ordering System, restaurants can run their own branded online ordering platform without incurring the high fees usually charged by third-party services.
It allows you to set your prices and offer competitive rates to customers while keeping the entire order total. There's no need to surrender a percentage of each sale, which helps you maintain your profit margins.
iOrders' Smart Campaigns lets restaurants use data-driven insights for targeted marketing. This feature helps you proactively connect with customers and encourage repeat business without the high fees from third-party platforms. The system provides actionable insights to improve your marketing spend and boost your ROI.
Personalized, data-driven campaigns enable restaurants to reduce marketing expenses while enhancing customer engagement and retention.
iOrders' loyalty and rewards programs assist restaurants in building customer loyalty by providing incentives for repeat business. You can design customized rewards based on customer behavior, like offering discounts or free items after a set number of orders.
These loyalty programs foster repeat business and customer retention without the expense of third-party advertising.
Effective customer feedback management builds reputation but can be costly; iOrders' AI-powered review management system automates responses to reviews and FAQs, maintaining brand consistency while reducing effort.
It allows you to maintain high-quality customer service while reducing the time and resources spent on review management. Automated review responses save time and resources while strengthening customer relationships
iOrders provides a complete suite of comprehensive solutions for restaurants while maintaining your branding and customer relationships.
The table clearly shows how iOrders delivers more value at a lower cost, making it an excellent choice for restaurants looking to reduce delivery fees and maintain full control over their brand and customer relationships.
Choosing the right food delivery service is vital for restaurants. Third-party platforms offer reach and convenience, but high commissions and limited data control cut into profits. These costs challenge maintaining healthy margins while providing quality service.
iOrders is the most cost-effective solution with commission-free online ordering, flexible delivery, and full control over branding and customer data. Restaurants can cut reliance on third-party platforms, streamline delivery, and keep costs low while maintaining a direct customer relationship.
Ready to save on delivery fees and take control of your restaurant's brand identity? Book a demo with iOrders today and discover how our platform can help your business increase profitability.
1. What are the long-term financial impacts of using third-party delivery services?
While short-term gains may be noticeable, third-party delivery services can severely impact long-term restaurant profitability due to high commissions and recurring fees.
2. Can I negotiate better delivery terms with third-party platforms?
Yes, some third-party platforms may offer negotiable rates for restaurants with higher order volumes or if you commit to using their service exclusively.
3. Does iOrders charge any hidden fees/charges?
No, iOrders doesn't charge any hidden fees such as service fees, marketing fees, and additional charges for premium positioning or visibility on third-party platforms. Restaurants should be aware of these hidden charges.
4. How do customer preferences influence the choice of delivery service?
Customer preferences for speed, convenience, and loyalty rewards can significantly affect which delivery service a restaurant should choose to maintain satisfaction and retention.
5. How can food delivery services affect a restaurant's reputation?
Delivery services can impact a restaurant's reputation based on factors like delivery speed, food quality upon arrival, and customer service provided through the platform.
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