Delivery app promotions: do they pay back?

An app promotion pays back only if the extra orders it brings, plus the full-price orders those new customers place later, leave more than you lose on every discounted order. To find out, work out what you keep per order with and without the promotion and divide one by the other: that number tells you how many times as many orders you need just to stand still. With a 20% discount that you fund, you always need more than 20% extra orders, because the discount comes off whole from what you keep.

What you keep per order, before and during

Start with the order without a promotion:

kept per order = price − commission − food − packaging

The commission is the one in your contract. This guide uses 25% purely as an example. Then redo the sum with the promotion. Two questions change the result, and you need both answered by the app in writing:

• Which part of the discount do you pay? All of it, half, none. Count only yours.
• Is commission charged on the discounted price or the full price? If it is on the full price, the customer pays less but the commission does not fall.

The guide to what a discount really costs you explains the same logic outside the apps.

How many extra orders you need

With both numbers, the sum is:

orders needed with promotion = orders without × (kept without ÷ kept with)

If you keep $5.50 without the promotion and $2.75 with it, you need twice the orders to earn the same each day. Only beyond that number does the promotion start to leave you anything.

Worked example: smoothie bowls at 20% off

You sell smoothie bowls on a delivery app. Prices are before any sales tax.

Without a promotion:

You sell 40 bowls a day on the app: 40 × 5.50 = $220 a day.

With a 20% discount you fund. The customer pays 13.00 × 0.80 = $10.40.

• If commission is charged on the discounted price: 10.40 × 0.25 = $2.60, and you keep 10.40 − 2.60 − 3.60 − 0.65 = $3.55.
• If commission is charged on the full price: it stays at $3.25, and you keep 10.40 − 3.25 − 3.60 − 0.65 = $2.90.

Orders you need to stand still:

• Commission on the discounted price: 5.50 ÷ 3.55 = 1.55. You need 55% more orders: 220 ÷ 3.55 = 62.0, so 62 a day instead of 40.
• Commission on the full price: 5.50 ÷ 2.90 = 1.90. You need 90% more orders: 220 ÷ 2.90 = 75.9, so 76 a day.

A 20% cut in price demands between 55% and 90% more orders, depending on how the app charges. That is why that question comes first.

Other kinds of promotion

Featured placement. Say the app charges $30 a day for a featured spot (an example figure; yours is in your contract). There is no discount here, so each extra order leaves you the full $5.50. You need 30 ÷ 5.50 = 5.5, so 6 extra orders every day just to pay for the placement. If the app reports how many orders came from that spot, compare it with that 6.

Free delivery you fund. If covering delivery costs you $2.50 per order (another example), you keep 5.50 − 2.50 = $3.00. You need 5.50 ÷ 3.00 = 1.83 times the orders, 83% more.

The hidden cost: customers who would have ordered anyway

The discount does not apply only to new customers. It applies to everyone who orders during the promotion, including your regulars, who would have paid full price. That is the cost people see least.

Say you ran the 20% promotion for 14 days, with commission on the discounted price. Your orders rose from 40 to 55 a day:

• During the promotion you kept 55 × 3.55 = $195.25 a day.
• Without it you kept $220 a day.
• You lost 220 − 195.25 = $24.75 a day, and over 14 days, 24.75 × 14 = $346.50.

Orders went up 37.5% and you still lost money, because they did not reach the 55% you needed.

When new customers pay it back

The promotion can still pay back if new customers return later at full price. To recover $346.50 at $5.50 per order you need 346.50 ÷ 5.50 = 63 more full-price orders from those customers.

Say you counted 160 new customers in those 14 days. What happens next is something you measure, not guess:

• If 1 in 4 comes back and places 3 more orders over the following months: 160 × 0.25 × 3 = 120 orders × 5.50 = $660. You recover the $346.50 and are $313.50 ahead.
• If 1 in 10 comes back once: 160 × 0.10 × 1 = 16 orders × 5.50 = $88. You fall well short of 63 orders and the promotion cost you $258.50.

That is why what you do to bring them back matters so much: a flyer in the bag with your own ordering link, a bowl that arrives cold and on time, a reason to order again. The guide on how to keep customers coming back covers exactly that.

How to set up a promotion that makes sense

• Set an end date from the start. Two weeks is enough to measure.
• Write down your numbers first. Orders per day and what you keep per order for the two weeks before.
• Choose the item. Put the discount on a bowl or combo that leaves you more per order, not on the whole menu.
• Ask for a minimum order if the app allows it, so the discount comes with a bigger basket.
• Prefer quiet hours. A discount at 3 pm fills an empty kitchen; at lunchtime, it only discounts orders you already had.
• Measure afterwards. How many of the new customers come back the following month.

If your app price is not right yet, start there: the guide to selling on delivery apps shows how to set it, and the delivery app price tool gives you the app price that keeps your margin after commission. The guide to delivery-first food businesses shows where promotions sit in the cost per order.

Do it with the calculator

Put your recipe, packaging and app commission into the food cost calculator, and it gives you the price you need, with tax and channel commission included. From that price, work out what you keep with and without the discount before you accept a promotion.