Food delivery can eat up 15–30% of your profits through third-party commissions. But small restaurants can reduce these costs and boost profitability by following these 10 strategies.
Summary:
Set Up Your Own Online Ordering System: Avoid high commissions by using platforms like Maynuu, saving up to 25%.
Define Delivery Zones: Limit long-distance orders to cut fuel and labour costs.
Use a Hybrid Delivery Model: Combine in-house and third-party delivery to save up to 30%.
Optimise Your Menu for Delivery: Focus on dishes that travel well and reduce waste.
Buy Supplies in Bulk: Save up to 30% on food and packaging costs.
Integrate POS with Delivery Systems: Improve efficiency and reduce errors by 15–20%.
Adjust Delivery Fees by Distance: Charge based on delivery zones to stay profitable.
Reduce Food Waste: Use inventory tracking and portion control to save money.
Review Delivery Contracts: Negotiate better rates and avoid hidden fees.
Cross-Train Staff: Train employees for delivery roles to cut labor costs by 22%.
Quick Comparison of Cost-Saving Strategies
| Strategy | Potential Savings | Key Benefit |
|---|---|---|
| Online Ordering System | Avoid 15–30% commissions | Direct customer connection |
| Delivery Zones | Save 15% on fuel | Shorter delivery times |
| Hybrid Delivery | Save 30% on costs | Balance in-house and third-party |
| Delivery-Friendly Menu | Save 30% on food costs | Better food quality |
| Bulk Purchasing | Save 10–30% on supplies | Lower ingredient costs |
| POS Integration | Boost efficiency 15–20% | Fewer order errors |
| Distance-Based Fees | Cut losses by 18% | Match fees to delivery costs |
| Food Waste Reduction | Save 2–6% in margins | Less waste, more profit |
| Contract Review | Save 2–3% on commissions | Better terms with platforms |
| Staff Cross-Training | Save 22% on labor costs | Flexible workforce |
How to Lower Restaurant Delivery Cost to 3.33%
1. Use Your Own Online Ordering System
Setting up your own online ordering system can help you avoid third-party commissions, which often eat into your profits. Direct systems typically charge only 2-3% in transaction fees. Plus, it aligns with customer preferences - 70% of diners prefer ordering directly from restaurants. It’s a win for both your wallet and your customer experience.
Here are some budget-friendly platforms tailored for small restaurants:
| Platform | Key Features | Cost Structure |
|---|---|---|
| GloriaFood | Online ordering, menu management | Free setup + optional paid add-ons |
| Square | POS integration, inventory tracking | Free + 2.9% processing fee |
| ChowNow | Custom-branded app, marketing tools | Flat monthly fee |
| Maynuu | QR ordering, multi-location support | Free essential package + processing fees |
Running your own system also gives you access to valuable customer data. This data can be a game-changer for marketing, allowing you to create personalised campaigns that boost customer retention by up to 25%. You’ll gain insights into:
- Ordering trends
- Contact details
- Customer preferences
- Direct communication opportunities
Integrating your ordering system with your existing POS setup can simplify operations. Look for platforms that offer mobile-friendly designs, customisable menus, and delivery zone management for maximum efficiency.
While it requires some initial effort, the cost savings and control you gain make this a smart strategy for cutting delivery costs in the long run.
2. Set Clear Delivery Boundaries
Building on your ordering system (Strategy #1), setting clear delivery boundaries helps cut down on unprofitable long-distance orders. Studies show that delivery times go up by 1.5 minutes for every additional 0.8 kilometres, which drives up fuel and labour costs.
Here’s a quick breakdown of how different delivery zone models can affect costs:
| Zone Type | Best For | Cost Impact |
|---|---|---|
| Fixed Radius | Dense urban areas | Keeps fuel costs predictable and delivery times consistent |
| Custom-shaped Zones | Areas with geographic barriers | Avoids inefficient routes by using flexible, non-circular boundaries |
A great example of this in action is Pizzeria Locale in Denver. In June 2022, they reduced their delivery radius from 5 miles (8km) to 3 miles (4.8km). The results? Average delivery times dropped from 45 minutes to 32 minutes, customer satisfaction jumped by 22%, and fuel costs fell by 15%, saving them $2,100 annually on fuel alone.
To refine your zones, use tools like Google Maps API to identify high-density areas. You can also implement tiered delivery fees (see Strategy #7) and review your performance every quarter. For instance, a suburban Italian restaurant uses a hybrid approach: they partner with third-party services for long-distance dinner orders while maintaining a 3-mile in-house radius. This strategy boosted their orders by 30%. It also ties directly into Strategy #3 (Mix Delivery Methods), balancing cost savings with broader coverage.
3. Mix In-House and Third-Party Delivery
Combining in-house and third-party delivery methods can lead to significant savings. In fact, restaurants using this strategy save up to 30% on delivery costs compared to relying solely on third-party services.
Here’s a breakdown of how different delivery types are best utilized:
| Delivery Type | Best For | Cost Savings |
|---|---|---|
| In-house | Short distances (within 5 km), loyal customers | Avoids third-party fees (typically 15-30%) |
| Third-party | Busy hours, long distances | Eliminates fixed staffing costs |
| Hybrid | Fluctuating demand | Cuts staff costs during slow periods |
Tips to Optimize Costs
- Track peak hours: Allocate in-house drivers during slower times and rely on third-party services during busy periods.
- Set limits for third-party use: Cap the number of orders routed to third-party providers to avoid excessive fees.
- Negotiate rates: Use steady order volumes to secure better rates with third-party platforms.
Using geo-fencing tools (as highlighted in Strategy #2) can automate order routing, sending deliveries outside your core service area to third-party providers. This ensures you maintain cost control while expanding your delivery range.
Additionally, consider offering loyalty rewards for direct orders. This approach keeps order volumes consistent throughout the day. Pairing this with a simplified menu (see Strategy #4) allows you to focus on high-margin items for in-house delivery, maximizing profitability.
4. Design a Delivery-Friendly Menu
Crafting a well-thought-out delivery menu can help cut costs while ensuring your food arrives in great condition. Restaurants can trim up to 30% off food expenses by reworking their delivery menu structure. This strategy complements delivery zone management (Strategy #2) and hybrid delivery methods (Strategy #3), creating a more efficient operation. Plus, a focused menu simplifies bulk purchasing (Strategy #5) by limiting the range of ingredients needed.
Smart Menu Engineering
| Food Type | Delivery Performance | Cost-Saving Benefits |
|---|---|---|
| Braised/Slow-cooked | Retains heat well | Faster prep, bulk cooking |
| Stews & Curries | Maintains quality | Easier, cost-effective packaging |
| Build-your-own Bowls | Highly customisable | Reduces waste, speeds up prep |
| Pre-portioned Meals | Consistent quality | Simplifies assembly |
For example, Chipotle Mexican Grill's 2023 packaging update introduced compartmentalised containers. This change kept ingredients fresh, cut packaging costs by 22%, and boosted customer satisfaction scores by 17%.
Temperature and Quality Control
Focus on dishes that naturally hold their temperature well. Here are some practical steps:
Pre-portion ingredients: Standard portions make assembly faster and reduce waste. This also helps track waste trends (see Strategy #8).
Separate components: Pack sauces and dressings separately to keep textures and flavors intact.
Menu Optimisation Tips
"Build-your-own" options are a smart way to improve efficiency. Here's how:
Transform complex dishes into delivery-friendly options.
Choose durable ingredients like romaine lettuce instead of delicate mixed greens.
Offer DIY assembly kits for items that don't travel well.
This approach ties back to Strategy #5, as it focuses on core ingredients that can be bought in bulk, keeping costs low and operations smooth.
5. Buy Supplies in Bulk
Buying in bulk can cut delivery costs significantly, saving restaurants up to 30% on food expenses through wholesale deals. This pairs well with menu adjustments (see Strategy #4), ensuring consistent ingredients.
Group Purchasing Power
Joining a Group Purchasing Organization (GPO) can help small restaurants save 7-12% on food and supplies. GPOs use collective bargaining to secure better deals. Here's a quick comparison:
| Purchasing Method | Average Savings | Extras |
|---|---|---|
| Individual Bulk Orders | 10-20% | Build direct supplier ties |
| GPO Membership | 7-12% | Benefit from group negotiations |
| Direct Supplier Contracts | 15-25% | Get priority on inventory |
Smart Inventory Management
Managing bulk purchases effectively is key. Here’s how:
- Optimise storage: Use temperature-controlled units, airtight containers, and well-organised shelves to keep supplies fresh and accessible.
- Leverage digital tools: Automate reorders, track usage patterns, and set alerts to minimise waste.
Prioritise Key Categories
Focus on bulk buying for items that directly impact delivery costs:
- Staples: Rice, pasta, canned goods.
- High-use ingredients: Think sauces and spices.
- Delivery essentials: Packaging and containers to lower per-order costs.
- Cleaning products: Sanitisers and gloves for hygiene.
Build Strong Supplier Relationships
Good relationships with suppliers can lead to better deals. To strengthen these partnerships:
- Place consistent orders.
- Use loyalty programmess when available.
- Negotiate discounts for frequently used items.
6. Connect POS with Delivery Systems
Integrating your POS system with delivery platforms can simplify operations, minimize mistakes, and improve delivery efficiency. This approach can potentially boost operational efficiency by 15-20% and reduce order errors by up to 25%. It also complements menu planning efforts (as discussed in Strategy #4) by maintaining precise ingredient tracking.
Affordable Integration Options
Here are some budget-friendly POS systems that offer delivery-focused features:
| POS System | Monthly Cost | Features for Delivery Integration |
|---|---|---|
| Square | $60 | Real-time delivery route optimization |
| Toast | $69 | Automated delivery dispatch |
| Lightspeed | $59 | Delivery-specific workflow management |
| Clover | $39.95 | Dynamic delivery tracking |
Tips for Getting the Most Out of Integration
- Automate Order Transfers: Link your POS to kitchen systems to avoid manual data entry.
- Sync Inventory in Real-Time: Ensure accurate menu availability by connecting inventory to delivery platforms.
- Centralise Performance Tracking: Use integrated reporting to monitor delivery metrics and reduce labor costs per delivery, aligning with hybrid delivery strategies (Strategy #3).
Implementation Advice
Test integrations during slower hours to work out any issues, and train staff to handle troubleshooting. Regular software updates are key to keeping everything running smoothly.
When choosing a POS system, look for features like native delivery platform integration, real-time menu syncing, and tools for optimising delivery routes. Leveraging POS data can even help you adjust delivery fees dynamically based on distance.
7. Adjust Delivery Fees by Distance
Setting delivery fees based on distance can help small restaurants control costs while staying profitable. This method works especially well when paired with defined delivery boundaries (see Strategy #2) and route planning through POS systems (see Strategy #6).
Setting Up Distance-Based Pricing Zones
Create clear delivery zones with tiered fees that match your actual delivery costs. Here's an example:
| Zone | Fee | Minimum Order |
|---|---|---|
| 0-3 km | $2.99 | $15 |
| 3-5 km | $3.99 | $20 |
| 5-7 km | $4.99 | $25 |
| 7+ km | Custom | $35 |
Tips for Smooth Implementation
Make your distance-based pricing work better by following these strategies:
- Use delivery software to automatically calculate fees and offer free delivery for larger orders (e.g., $50-$75 and up).
- Add easy-to-understand delivery zone maps to your website and ordering platforms.
These practices also tie in with bulk purchasing efficiencies (see Strategy #5), making your delivery system more predictable and manageable.
Real-Life Example
A burger joint in suburban Chicago implemented this model and cut delivery-related losses by 18% in just six months.
Fine-Tuning Your Fee Structure
When deciding on your delivery fees, keep these factors in mind:
- Fuel Costs: Calculate average fuel expenses per mile.
- Labour Costs: Account for driver wages on longer trips.
- Local Pricing: Stay competitive with other businesses in your area.
- Order Value: Adapt fees based on typical order sizes.
- Focus Areas: Prioritise zones with high customer density, as identified through delivery boundary analysis (see Strategy #2).
Make sure your fee structure is clearly visible on all ordering platforms and receipts. This transparency helps keep your delivery operations efficient and customer-friendly.
8. Monitor and Reduce Food Waste
Food waste can take a big bite out of your delivery operation's profits. Restaurants produce roughly 11.4 million tons of food waste each year, costing the industry $25 billion annually. Cutting down on waste not only saves money but also ties in perfectly with bulk purchasing (Strategy #5) and menu optimisation (Strategy #4) by syncing ingredient use with actual demand.
Digital Tracking Systems
Leverage digital tools to monitor:
- Daily waste amounts by category
- Expiration dates
- Inventory levels
- Order trends
- Temperature conditions
Smarter Inventory Management
Adopt these practices to minimize waste:
| Method | Benefit |
|---|---|
| Just-in-time cooking | Cuts down on overproduction |
| Vacuum sealing | Extends the life of ingredients |
Real-World Example
"After adopting Winnow's AI system in 2022, Sweetgreen cut food waste by 35% and saved $500,000 annually."
Practical Waste-Reduction Tips
- Conduct weekly waste audits to spot recurring issues.
- Standardize portion sizes for delivery orders to balance waste control and profitability.
- Turn leftover ingredients into daily specials to avoid throwing them away.
Tech Integration for Better Efficiency
Link inventory tools with your POS system (see Strategy #6) to:
- Track inventory in real time
- Automatically update online menus based on stock
- Generate waste reports
- Predict busy times and adjust prep accordingly
Restaurants using these strategies often see profit margins grow by 2-6%, thanks to lower food costs and smoother operations. Every dollar saved on wasted ingredients means fewer last-minute supply orders.
You can also use apps like Too Good To Go (or a similar local chapter) to sell surplus food at discounted prices during slow periods or at the end of the day. This method not only recovers costs but also aligns with a delivery-friendly menu (Strategy #4).
9. Review Delivery Service Contracts
Reviewing your delivery service contracts can make a big difference in your costs. By carefully analysing and negotiating key terms, you can uncover ways to save money and improve your agreements.
Key Contract Elements to Evaluate
| Area to Focus On | Negotiation Goal | Potential Savings |
|---|---|---|
| Commission Rates | Discounts based on order volume | Save 2-3% for 100+ weekly orders |
| Marketing Support | Added promotions | Gain platform-sponsored ads |
| Data Access | Rights to customer data | Enable direct marketing |
Use Your Performance Data to Negotiate
If you're using POS data (see Strategy #6), leverage it to showcase your value. For example, a restaurant with a 4.8/5 star rating and 95% on-time deliveries can argue for better rates. Focus on these metrics during discussions:
- Customer satisfaction scores
- Order accuracy
- Average order size
- Delivery speed
Best Times to Renegotiate
Plan to review contracts every six months, especially if your business has grown. For example, a 50% increase in monthly orders can give you stronger leverage. Also, consider negotiating during slower periods, as delivery platforms may be more open to adjusting terms. This aligns with the staffing strategies covered in Strategy #10.
Watch Out for Common Contract Issues
Be on the lookout for these potential problems that could cost you more in the long run:
- Hidden Fees: Check for unexpected charges beyond standard commissions.
- Exclusivity Clauses: Keep the option to work with multiple platforms.
- Data Ownership: Ensure you have access to customer information.
- Renewal Terms: Avoid automatic renewals with tight cancellation windows.
Taking the time to review and adjust your contracts can help you fine-tune your delivery operations, giving you the flexibility needed to stay competitive.
10. Cross-Train Staff for Delivery
Training your restaurant staff to handle delivery roles can cut costs and improve efficiency. In fact, it’s been shown to increase efficiency by 17% while reducing dependence on third-party drivers.
Core Training Areas
| Role | Skills to Master | Impact on Costs |
|---|---|---|
| Order Management | Quality control, packaging | Cuts down on errors |
| Delivery Operations | Route planning, navigation | Speeds up deliveries |
| Customer Service | Problem-solving, communication | Reduces complaints |
| Technology | POS, delivery platforms | Enhances system use |
Implementation Strategy
A step-by-step approach to cross-training ensures better results. For example, Pizzeria Uno in Chicago introduced a detailed training programme that cut labour costs by 22% and improved delivery times by 35% during busy periods. This strategy works hand-in-hand with POS integration (see Strategy #6), helping staff make the most of delivery tools.
Key Benefits for Cost Reduction
Cross-training allows staff to take on multiple roles, lowering labor costs and speeding up order processing.
Measuring Success
Track these performance metrics to measure progress:
- Delivery times
- Customer satisfaction scores
- Orders handled per staff hour
- Percentage of labour costs
- Order accuracy rates
"Restaurants with successful cross-training programs saw an average improvement of 18% across key performance indicators within the first year of implementation", according to the Food Delivery Institute.
Integrate with Existing Systems
Tie your training programme to your POS (see Strategy #6) and delivery platforms (see Strategy #3) for smoother operations. For example, UberEats offers a free online training platform that has helped restaurants speed up deliveries by as much as 25%.
Overcoming Common Challenges
To tackle resistance to cross-training:
- Explain the advantages to your team
- Roll out training in stages
- Provide ongoing support
- Offer incentives for mastering new skills
Online Ordering Systems Cost Comparison
This comparison highlights how selecting the right online ordering platform can lead to significant cost savings, building on Strategy #1's focus on direct ordering systems.
Monthly Subscription vs. Commission Models
Here's a breakdown of costs for some popular platforms:
| Platform | Base Monthly Fee | Commission Per Order | Additional Fees |
|---|---|---|---|
| Maynuu | $0 | 5-9% | Payment processing only |
| ChowNow | $149 | 0% | Setup fee |
| Toast | $69 | 2% + $0.10 | POS integration fees |
| Grubhub | Marketing fee | Up to 20% | Payment processing 3.5% |
| Uber Eats | Varies | Up to 30% | Marketing fees |
Hidden Costs to Watch For
While the upfront fees are clear, hidden costs can quietly add up and impact your savings. These include:
- Payment processing fees (up to 4%)
- Hardware costs ($200–$500 per unit)
- POS integration fees
- Marketing premiums
These fees can erode the benefits of bulk purchasing (as discussed in Strategy #5) if not managed carefully.
Feature Comparison Matrix
When comparing features, Maynuu offers more flexibility compared to traditional platforms:
| Feature | Maynuu | Traditional Platforms |
|---|---|---|
| Menu Management | Included | Included |
| Branded Ordering | Customisable | Limited options |
Integration Capabilities
Technical features play a key role in supporting Strategy #6's emphasis on POS integration. The right platform should offer:
- Direct POS system connections
- Real-time stock updates
- Automated financial tracking
- Email and social media integration
Combined with tools like delivery zone management (Strategy #2) and staff training (Strategy #10), the right platform can become a core part of reducing costs effectively.
Conclusion
The 10 strategies discussed here offer a structured approach to cutting delivery costs. By combining key tactics - like implementing direct ordering systems (Strategy #1) and forming selective third-party partnerships (Strategy #3) - restaurants can boost profit margins without compromising service quality.
The focus should remain on three main areas:
- Integrated technology systems
- Flexible staffing models
- Strategic menu design
Additionally, leveraging tools such as data analytics from POS systems (Strategy #6) can help predict demand and streamline operations. Many small restaurants have found that clearly communicating delivery policies while highlighting customer perks has led to stronger loyalty and a rise in direct orders.
FAQs
How can I save money on food delivery?
One of the best ways to cut down on food delivery costs is by setting up your own online ordering system. This helps you avoid the hefty 15-30% commissions charged by third-party platforms.
Why it works:
- You skip paying those high commissions.
- It lets you connect directly with your customers.
- You gain access to valuable ordering data.
This ties back to Strategy #1, which emphasizes building stronger customer relationships through systems you own.
What’s the difference between in-house and third-party delivery?
Here’s a quick breakdown of the two delivery options:
| Aspect | In-House Delivery | Third-Party Delivery |
|---|---|---|
| Cost Control | Fixed operational costs | Commission-based pricing |
| Customer Access | Full data ownership | Limited data sharing |
| Flexibility | Depends on internal resources | Immediate wider reach |
For smaller restaurants, a mix of both can work well. For example, you can handle deliveries in-house during busy hours and rely on third-party services to cover less predictable times. This approach, highlighted in Strategy #3, helps balance costs and efficiency.
To make this hybrid model even stronger, consider using negotiation techniques from Strategy #9 to manage third-party contracts effectively.
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We use the term 'restaurant' throughout the article for consistency. However this guide can be generally applied to any type of food shop, including but not limited to: bakeries, bars, bistrots, boulangeries, butcheries, cafés, caterers, coffeeshops, delis, diners, eateries, food trucks, patisseries, pubs, etc.
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