January 6, 2026
For many small businesses, especially restaurants, delivery fees are a hidden profit killer. These costs, often ranging from 15–30% per order, can significantly erode margins. While delivery is now a necessity for survival, the high fees charged by third-party platforms like Uber Eats or SkipTheDishes are unsustainable for smaller operators.
But what if you could keep the full value of each order? What if you could manage delivery fees in a way that strengthens your brand rather than draining it? iOrders offers a solution that empowers restaurants to reclaim control over their deliveries - without third-party commissions.
In this blog, we'll explore how delivery fees work, why they matter, and how small businesses can take charge of their delivery strategy without losing profits.
A delivery fee is the cost your business incurs to deliver an order from your restaurant to a customer's door. Sounds straightforward, right? But the reality is that these fees can vary widely depending on several factors and can quickly add up, especially when you rely on third-party platforms.
At its core, a delivery fee isn't just about the cost of getting food from point A to point B. It encompasses everything from the logistics and drivers' time to platform fees charged by delivery providers like Uber Eats or DoorDash. For small businesses, these fees are an ongoing expense that can eat into your profits if not managed properly.
While delivery is crucial to customer satisfaction, understanding what makes up the delivery fee and how to control it can give you a competitive edge.
Delivery fees aren't pulled out of thin air; they result from a combination of factors that can vary from platform to platform and city to city. Understanding how these fees are calculated can help you anticipate costs and identify opportunities to save.
Here's what typically goes into setting delivery fees:
As a small business, these factors are primarily out of your control when using third-party platforms.
When it comes to delivery fees, there's more at play than just how far the food travels. Small businesses need to be aware of the key factors that influence delivery costs so they can make informed decisions and manage them effectively. Here's a breakdown of the critical elements that impact delivery fees:
Delivery fees can differ significantly depending on where your restaurant and your customers are located. Restaurants in densely populated urban areas may charge lower fees due to higher demand. In comparison, those in rural or suburban areas may charge higher costs due to longer distances and fewer delivery options.
During busy times like lunch rushes, dinner time, weekends, or holidays, delivery providers may impose surge pricing. When demand is high, both delivery drivers and platforms raise their rates to match the increased workload. This can make it hard for small businesses to predict and control their costs.
Larger or more complex orders (think large catering orders or items that require special handling) usually mean higher delivery costs. Not only does the driver need to carry more, but there might also be more stops or additional handling charges. Simplified menus and streamlined ordering can help manage this.
The delivery service you choose plays a significant role in how fees are structured. Third-party platforms like Uber Eats and DoorDash often charge a commission per order, in addition to delivery fees. On the other hand, in-house delivery staff or white-label services (such as those offered by iOrders) can provide greater control over both the fee structure and the customer experience.
Many delivery services now use sophisticated algorithms to calculate delivery fees based on real-time conditions, such as traffic and weather. However, with iOrders' integrated POS system and direct delivery options, you can achieve a more predictable, transparent cost structure without relying on fluctuating third-party algorithms.
By understanding these factors, restaurants can better anticipate and manage delivery fees, ensuring they don't cut too deeply into profits.
Also Read: How to Make a Small Restaurant Grow: Top 33 Tips
For restaurants and small businesses, understanding the delivery fee structure is key to balancing cost efficiency and customer satisfaction. While third-party platforms often impose standard fees, you have the option to choose a fee model that works for you. Let's take a closer look at the types of delivery fees that small businesses typically use:
1. Flat Delivery Fee
A flat delivery fee is simple - your customers pay the same amount regardless of where they live or how much they order. It’s easy to communicate and predict, but it doesn't always reflect the actual delivery cost. If your restaurant serves customers both near and far, a flat fee might result in overcharging closer customers or undercharging those further away.
However, it's a good fit for restaurants with relatively uniform delivery distances.
2. Variable Delivery Fee
Variable fees are based on distance, order size, or even time of day. For example, a customer living closer to your restaurant pays a lower delivery fee, while a customer who's further away pays more. This pricing model aligns with the actual delivery cost, making it fairer for both parties.
The downside? It can be tricky to manage during busy times or when customer expectations aren't aligned with fluctuating costs.
3. Minimum Order Fee
This is a smart way to avoid losing money on small orders. By setting a minimum order (say $20 or $30), you ensure that delivery is worth the time and resources. It also encourages customers to spend a little more to qualify for delivery. The challenge is communicating this fee clearly.
If customers don't know about the minimum, they may be frustrated when they find out it's required at checkout. Transparency is key here.
4. Surge Pricing
Surge pricing is a pricing strategy third-party platforms use to adjust delivery fees based on demand. Think of it like Uber's pricing during rush hour - prices go up when demand spikes. As a small business, you don't control when surge pricing hits, but you might see it eat into your margins when delivery providers adjust their fees during peak hours.
It's unpredictable and complex to manage, but iOrders helps mitigate this by offering fixed-cost delivery through direct integration.
5. Service Fees/Handling Charges
Some restaurants tack on a service fee to cover costs like packaging, driver gratuity, or third-party platform fees. While these fees can help offset some operational costs, they can make your service feel less transparent. Customers might be wary of unexpected extra charges.
By understanding how each of these delivery fee models impacts both your business and your customers, you can make smarter decisions about your pricing strategy.
When it comes to choosing a delivery provider, small businesses face a tough choice. According to Statista, revenue in the Online Food Delivery market is projected to reach $15.61bn in 2025.
However, major third-party platforms, while convenient, come with high fees that can chip away at your profits. Understanding the options available, including the major players in the Canadian market, can help you make more informed decisions.
Launched in 2013, DoorDash has become the largest food delivery service in the US by market share. It connects diners with restaurants and local businesses through an easy-to-use app. Known for its substantial presence in suburbs and small towns, DoorDash offers a broad reach and flexibility.
Uber Eats is the food delivery arm of Uber, launched in 2014. It connects users to local restaurants through the same app they use to book rides. The platform serves thousands of cities across the US, offering a vast menu of choices and real-time tracking.
Founded in 2012, it is now a division of the Dutch company Eat Takeaway.com and uses an algorithm-based system to manage orders and dispatch efficiently. Customers can place orders and track them in real-time, and the service is available in over 250 cities across Canada.
Now imagine: For a restaurant generating $10,000 in monthly sales through third-party platforms, commission fees alone can amount to $2,000 to $3,000. Additional service and marketing fees can push this figure even higher, squeezing already tight profit margins.
iOrders offers a commission-free solution that allows restaurants to retain more revenue. Restaurants can reduce reliance on high-commission platforms and improve profitability.
Managing delivery costs is crucial for small businesses, especially restaurants, where profit margins can be tight. While it's impossible to eliminate delivery fees, you can implement several strategies to reduce their impact on your bottom line. Here's how you can manage and optimize your delivery costs effectively:
These strategies ensure you can create a pricing structure that works for your restaurant without sacrificing service quality.
Also Read: 8 Essential Restaurant Management Tips for Daily Success
In Canada, delivery fees are generally subject to sales tax (GST/HST), and businesses must ensure they charge the appropriate tax. This means that the delivery fee, along with any other charges (such as handling or service fees), must be taxed correctly. Failing to do so could lead to complications with tax authorities and potential fines.
For instance, if your restaurant uses third-party platforms, they may include taxes in the delivery fee they charge customers. As a business, you'll need to ensure the correct amount of tax is passed on to the customer, based on your local tax rate.
Some other legal and tax implications that can affect how fees are handled include:
1. Employee vs. Independent Contractor
When deciding whether to use third-party delivery services or in-house drivers, consider the classification of drivers. Third-party services typically classify their drivers as independent contractors, which means they're responsible for their own taxes. However, if you employ your own delivery drivers, they are classified as employees, and you'll need to comply with payroll taxes, workers' compensation, and other employment laws.
2. Delivery Fee Transparency and Customer Protection
Transparency is crucial when charging delivery fees. The Competition Act in Canada mandates that businesses must not mislead customers about the actual cost of a product or service. If you're charging additional delivery or service fees, you must clearly communicate them to the customer upfront or risk violating consumer protection laws. Many consumers feel misled when they see a $20 item online and then encounter hidden delivery or service fees at checkout.
3. Refund and Cancelation Policies
Delivery fees can complicate refund and cancelation policies, particularly if a customer isn't happy with their delivery. Refunds for delivery charges are subject to the terms and conditions you set, but it's essential to have a clear, legally compliant policy in place. For example, some businesses offer full refunds on delivery fees for late or incorrect orders.
Thus, offering transparent pricing and built-in tax handling helps reduce the risk of legal issues while keeping your delivery operations smooth and efficient.
As delivery becomes a critical part of the customer experience, the fees associated with it can either help or hinder profitability. iOrders provides a powerful solution that allows restaurants to regain control over delivery costs and maximize their bottom line, while maintaining a seamless customer experience.
Here's how iOrders helps restaurants optimize their delivery costs:
With iOrders, optimizing delivery costs is more than just eliminating third-party commissions. It's about integrating more innovative technologies, utilizing data, and creating a branded, efficient delivery system that works for both your business and your customers.
Also Read: How to Start and Run a Successful Restaurant in 10 Simple Steps
With great food, running a restaurant also requires the art of cost management. While some expenses, like rent and utilities, are fixed, many others, such as delivery fees, are within your control. Understanding how to optimize these costs can make all the difference in maintaining a profitable and sustainable business.
Delivery fees are often a central pain point for restaurants, but with the right systems in place, they don’t have to be. iOrders gives you the tools to take control of your delivery costs, eliminate third-party commissions, optimize delivery routes, and provide transparent pricing - all while maintaining a seamless, branded customer experience.
With iOrders, you're building a more resilient, profitable business that thrives in an ever-evolving market. By using data-driven insights and automated workflows, you can optimize your operations and keep your profits where they belong: in your pocket.
Take control of your restaurant's delivery costs today. Book a demo with iOrders and discover how our commission-free, seamless delivery solutions can help you save money and grow your business.
1. How do I manage delivery fees for my small restaurant during busy times like holidays or weekends?
To manage delivery costs during busy periods, you can set clear minimum order fees to cover them. Using iOrders, you can bypass third-party commission fees and maintain predictable, fair pricing, even during surge times.
2. Can I lower delivery costs if my restaurant is in a rural or less populated area?
Yes! iOrders offers a way to set fair, flexible delivery pricing that adapts to your location. By optimizing delivery routes and using in-house drivers, you can reduce costs and make deliveries more affordable, even for customers far away.
3. What happens if my delivery area expands? Will my costs increase dramatically?
Expanding your delivery area can increase costs, but iOrders helps you control them. By giving you the ability to manage flat or variable fees based on distance, you can keep delivery costs under control without sacrificing service quality.
4. How can I avoid paying extra fees when using delivery apps like Uber Eats or DoorDash?
You can avoid hefty third-party fees by switching to a platform like iOrders, which lets you handle delivery directly with commission-free solutions. This way, you're in complete control and can save money that would otherwise go to the delivery platform.
5. Can I get a better deal on delivery fees if I increase my order volume?
Yes, many platforms offer discounts for higher volumes, but those discounts still come with high commission fees. With iOrders, you bypass commissions entirely, which means more savings regardless of your order volume, giving you more control over your costs.
6. How can I keep delivery costs predictable with fluctuating gas prices or weather conditions?
iOrders helps you keep delivery costs predictable by offering flat fees and avoiding the fluctuations tied to third-party platforms. This means even with rising gas prices or bad weather, your costs remain stable, and you don't have to worry about surprise charges.
7. How do I communicate delivery fees clearly to my customers without confusing them?
To keep customers informed, clearly state delivery fees upfront on your website and app. iOrders offers transparent pricing, allowing you to customize your fee structure, and ensures that customers know exactly what they'll pay before checkout, avoiding any hidden costs.
