Discount promotions on delivery platforms can seriously damage your profit margins. Many entrepreneurs see more orders but forget that every euro of discount comes straight out of their margin. Calculate exactly what a discount promotion costs you and determine if it's actually worth it.
Why discount promotions are dangerous for your margin
A discount promotion on Thuisbezorgd or Uber Eats seems simple: offer 20% off and get more orders. But that 20% discount doesn't come off your revenue - it comes off your profit. And that difference is huge.
⚠️ Watch out:
With a normal margin of 15%, a 20% discount means you're running a 5% loss on every order. You're actually paying to serve customers.
The complete cost structure for delivery orders
Before you calculate the impact of a discount, you need to know what a delivery order really costs. It's not just the ingredients:
- Food cost: 28-35% (ingredients)
- Platform fee: 15-30% (Thuisbezorgd, Uber Eats)
- Packaging costs: 3-6% (containers, bags, stickers)
- Labor: 20-25% (preparation, packaging)
- Other costs: 10-15% (rent, energy, insurance)
This means your total costs are often 76-111% of your revenue. So your margin sits between -11% and +24%.
💡 Example cost structure:
Order of €25.00 (incl. 9% VAT):
- Revenue excl. VAT: €22.94
- Food cost (30%): €6.88
- Platform fee (25%): €5.74
- Packaging: €1.20
- Labor (22%): €5.05
- Other costs (12%): €2.75
Total costs: €21.62 - Profit: €1.32 (5.8%)
Calculate the impact of discount
Now it becomes clear why discounts are so dangerous. That €1.32 profit disappears quickly if you offer a discount - a mistake that costs the average restaurant EUR 200-400 per month:
💡 Example: 20% discount on €25 order:
Discount: €5.00
New revenue: €20.00 (excl. VAT: €18.35)
- Costs remain the same: €21.62
- New revenue excl. VAT: €18.35
Result: €3.27 loss per order (-17.8%)
The formula for margin impact
You can calculate the impact of any discount in advance using this formula:
New margin % = ((Revenue - Discount - Costs) / (Revenue - Discount)) × 100
Or simpler: New margin % = Old margin % - (Discount % × (Revenue / New revenue))
💡 Calculation example:
Old margin: 8% - Discount: 15%
- Revenue: €100 → New revenue: €85
- Impact: 15% × (100/85) = 17.6%
- New margin: 8% - 17.6% = -9.6%
You're running a 9.6% loss on every order
Discount makes sense (rarely)
Discount only works if it gets you structurally more orders that compensate for your loss. But this rarely happens:
- Temporary boost: More orders during the promotion, then back to normal
- Discount hunters: Customers who only order with a discount
- Lower average order value: People order less because it's cheaper
⚠️ Watch out:
Research shows that 70% of customers who order during discount promotions don't come back at regular prices.
Alternatives to discount promotions
Instead of destroying your margin with discounts, try these strategies:
- Free add-on: Free drink or side dish (lower cost than discount)
- Raise minimum order value: Free delivery from €30 instead of €20
- Bundle deals: Menus that increase average order value
- Loyalty program: Discount on every 10th order (spreads the cost)
Use data to steer
With a food cost calculator you see directly what every order generates. Calculate different scenarios before you start a promotion. This prevents unknowingly losing money on discounts that don't work.
How do you calculate the margin impact of discount? (step by step)
Calculate your current margin per order
Add up all costs: food cost, platform fee, packaging, labor and other costs. Subtract this from your revenue excl. VAT. This is your current profit per order.
Calculate the new revenue after discount
Subtract the discount amount from your original revenue. Don't forget to calculate VAT on the new, lower price.
Calculate your new margin
Your costs stay the same, but your revenue is lower. Subtract your costs from the new revenue. If this is negative, you're losing money on every order.
Calculate how many extra orders you need
Divide your loss per order by your old profit per order. This shows what percentage more orders you need to break even.
✨ Pro tip
Track your promotion performance for 4 weeks after it ends to see if customers return at full price. Most restaurants find that 70% of discount customers never order again at regular prices.
Calculate this yourself?
In the KitchenNmbrs app you can do this in just a few clicks. 7 days free, no credit card.
Was this article helpful?
Frequently asked questions
Why can't I just give 20% discount if I get 20% more orders?
Because discount comes off your profit, not your revenue. If your profit was 8% and you give 20% discount, you're running a 12% loss. You'd need much more than 20% extra orders to break even.
How do I calculate how many extra orders I need to compensate for discount?
Divide your loss per order by your original profit per order. With 8% profit and 20% discount you need approximately 350% more orders to earn the same.
Are there situations where discount makes sense?
Only if you structurally get many more customers who also keep ordering at regular prices. This rarely happens - most discount customers disappear once the promotion ends.
What's a better alternative to discount promotions?
Try free add-ons with low cost, raise minimum order values, or create bundle deals that increase your average order value instead of lowering prices.
How do I avoid running a loss during promotions?
Calculate in advance what each promotion costs and make sure your promotions increase your margin instead of decreasing it. Focus on higher average order value instead of lower prices.
Should I factor in the platform's commission on the discounted amount?
Most platforms calculate their commission on the full order value before discount, so your platform fee stays the same. This makes discounts even more expensive since you're absorbing the full discount cost.
📚 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.
Food cost control for delivery and dark kitchens
With delivery, margins are thinner than ever. KitchenNmbrs calculates your actual food cost including packaging so you know if every order is profitable. Test it free for 14 days.
Start free trial →