Free delivery promotions are everywhere these days, but they can silently destroy your restaurant's profitability. Most operators don't realize how dramatically these offers impact their bottom line. Here's how to calculate the real cost before launching your next campaign.
What does free delivery really cost?
Free delivery isn't actually free - you're just shifting the expense from customer to restaurant. And that shift can be more expensive than you think.
💡 Example:
Normal situation vs. free delivery:
- Order value: €25.00
- Delivery costs normally: €2.50
- Platform fee (25%): €6.25
- Packaging: €0.80
With free delivery, you absorb that €2.50. Your order value stays €25.00, but your expenses jump.
The hidden costs of delivery platforms
Delivery platforms charge commission on the total order value, including delivery fees. But you're absorbing those fees, your cost structure shifts dramatically.
- Platform fee: 15-30% of total order value
- Packaging costs: €0.50-€1.50 per order
- Delivery costs you pay: €2.00-€4.00 per order
- Payment processing: 2-3% of order value
⚠️ Watch out:
Platform fees get calculated on the order value before your discount. You're paying commission on revenue you never see.
Calculate your break-even point
From years of working in professional kitchens, I've seen operators launch promotions without understanding their break-even math. Here's how to avoid that mistake.
💡 Example calculation:
Normal margin per order: €8.00
Extra costs of free delivery: €2.50
New margin per order: €5.50
You lose €2.50 per order. To break even, you need 45% more orders (€8.00 ÷ €5.50 = 1.45).
Impact on different order sizes
Order size matters enormously. Larger orders absorb delivery costs better, while small orders can wipe out your margin entirely.
- Order €15: Delivery costs represent 17% of order value
- Order €30: Delivery costs represent 8% of order value
- Order €50: Delivery costs represent 5% of order value
That's why smart restaurants set minimum order thresholds for free delivery.
Long-term effects
Free delivery creates customer expectations that can permanently damage your pricing power. Once customers get used to free delivery, they resist paying for it again.
⚠️ Watch out:
A 2-week promotion can permanently alter customer behavior. Plan your exit strategy before launching the promotion.
Alternative strategies
Instead of completely free delivery, consider these margin-friendly alternatives:
- Reduced delivery: €1.00 instead of €2.50
- Free from amount: Free delivery from €35
- Temporary discount: 20% off the food itself
- Bundle deals: Appetizer + main course for fixed price
These options typically protect your margins better than completely free delivery.
How do you calculate the impact of free delivery? (step by step)
Calculate your current margin per order
Subtract from your average order value: food cost, platform fee, packaging and delivery costs the customer pays. This is your base margin per order.
Calculate extra costs of free delivery
Add up what free delivery costs extra: the delivery costs you now pay plus any additional platform fee on those costs. This reduces your margin.
Determine how many extra orders you need
Divide your original margin by your new lower margin. This number shows what percentage more orders you need to break even.
✨ Pro tip
Track your average order frequency for the first 30 days after ending a free delivery promotion. If orders drop below pre-promotion levels, you may have trained customers to only order during deals.
Calculate this yourself?
In the KitchenNmbrs app you can do this in just a few clicks. 7 days free, no credit card.
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Frequently asked questions
Do I have to pay VAT on delivery costs I pay myself?
No, delivery costs you pay to the platform are business expenses. You do charge 9% VAT on your food to the customer, regardless of who pays for delivery.
How do I prevent customers from always expecting free delivery?
Communicate upfront that it's a temporary promotion. Use terms like '2 weeks free delivery' instead of 'free delivery now'. Set a clear end date and stick to it.
Is free delivery from a minimum amount always better?
Usually yes. You encourage higher order values and delivery costs weigh less heavily. But calculate whether customers artificially inflate their orders with cheap items.
How do I measure if my free delivery promotion is successful?
Don't just compare the number of orders, but also your total profit. More orders with lower margin can yield less than fewer orders with higher margin.
What if my competitor permanently offers free delivery?
Focus on other advantages: quality, speed, packaging or customer service. Not every customer chooses purely on delivery costs. Calculate whether you can sustain it long-term.
Should I adjust my menu prices during free delivery promotions?
Some restaurants slightly increase menu prices to offset delivery costs. Test this carefully - a 5-10% price increase might be less noticeable than absorbing full delivery fees.
📚 Sources consulted
- EU Verordening 852/2004 — Levensmiddelenhygiëne (2004) — Official source
- EU Verordening 853/2004 — Hygiënevoorschriften voor levensmiddelen van dierlijke oorsprong (2004) — Official source
- EU Verordening 1169/2011 — Voedselinformatie aan consumenten (2011) — Official source
- NVWA — Hygiënecode voor de horeca (2024) — Official source
- NVWA — Allergenen in voedsel (2024) — Official source
- Codex Alimentarius — International Food Standards (2024) — Official source
- FSA — Safer food, better business (HACCP) (2024) — Official source
- BVL — Lebensmittelhygiene (HACCP) (2024) — Official source
- Warenwetbesluit Bereiding en behandeling van levensmiddelen (2024) — Official source
- WHO — Foodborne diseases estimates (2024) — Official source
Food Standards Agency (FSA) — https://www.food.gov.uk
The HACCP standards shown in this application are for informational purposes only. KitchenNmbrs does not guarantee that displayed values are current or complete. Always consult the FSA or your local authority for the latest regulations.
Written by
Jeffrey Smit
Founder & CEO of KitchenNmbrs
Jeffrey Smit built KitchenNmbrs from 8 years of hands-on experience as kitchen manager at 1NUL8 Group in Rotterdam. His mission: give every restaurant owner control over food cost.
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