Delivery always costs something, even when no invoice shows it. Deliver yourself and you pay in fuel, vehicle wear and hours. Use a courier and you pay a flat fee per drop. Sell through an app and you pay a percentage of every order. To know what it costs, work out the cost of one delivery under each option and compare it with the order's contribution. On small orders, delivery can eat the whole profit.
Why delivery is a hidden cost
Delivery is not in the recipe, so it is easy to leave out. It is one of the hidden costs of a food business, along with payment fees and equipment wear. The difference is that it is paid per order, not per unit. A two-box order and a ten-box order cost almost the same to drive across town.
Before you calculate, you need three numbers:
- The loaded cost of what is in the order: ingredients, packaging, your labour, energy and waste.
- The price of the order.
- The order contribution: price minus loaded cost. Delivery is paid out of this.
How to cost each option
Delivering yourself
If you or someone in the household drives, one trip has three parts:
- Fuel: fill the tank, note the mileage, and next time you fill up divide what you paid by the miles driven. That is your fuel cost per mile.
- Vehicle wear: tyres, servicing, repairs and the value the car loses. It works like equipment depreciation: what it costs to keep and eventually replace the vehicle, spread over the miles you drive.
- Time: the round trip, at what your hour is worth. If you do not pay yourself a wage, use what you would pay someone else to do it.
Trip cost = miles × (fuel per mile + wear per mile) + hours × your hourly rate.
Courier
This is the simplest: what they charge per drop. If the price changes with distance, note one per area. Add the time you spend booking and messaging if it is more than a minute or two per order.
Delivery app
The app takes a commission on each order. Check your contract for the exact rate and whether it is charged before or after tax. There may also be a charge for card payments on top, which is covered in payment fees in your price. Whether to raise your menu prices on the app to cover it is a separate decision, explained in selling on delivery apps.
Worked example: an order of five meal prep boxes
You sell meal prep boxes at $9.00 each. The loaded cost of one box is $4.60. A customer orders five. Figures are before any sales tax.
- Order price: 5 × 9.00 = $45.00
- Loaded cost: 5 × 4.60 = $23.00
- Order contribution: 45.00 − 23.00 = $22.00
That $22.00 has to pay for delivery. Now each option.
Your own car, single trip. The round trip is 10 miles and 45 minutes. You measured $0.20 a mile in fuel and estimate $0.10 a mile in wear. Your time is worth $16 an hour.
- Fuel: 10 × 0.20 = $2.00
- Wear: 10 × 0.10 = $1.00
- Time: 45 ÷ 60 × 16 = $12.00
- Total: $15.00
Your own car, route of four orders. You batch four orders in the same part of town. The full route is 24 miles and 2 hours.
- Fuel: 24 × 0.20 = $4.80
- Wear: 24 × 0.10 = $2.40
- Time: 2 × 16 = $32.00
- Route total: $39.20, so 39.20 ÷ 4 = $9.80 per order
Courier. Say the courier charges $8.00 per drop in that area.
Delivery app. Say the app takes 30% of the order: 45.00 × 0.30 = $13.50.
| Option | Delivery cost | % of order | Left from the order |
|---|---|---|---|
| Own car, single trip | $15.00 | 33.3% | $7.00 |
| Own car, route of four | $9.80 | 21.8% | $12.20 |
| Courier | $8.00 | 17.8% | $14.00 |
| App (30%) | $13.50 | 30.0% | $8.50 |
Two things stand out. Your own time is the biggest part of self-delivery, so a single trip is the most expensive option here. And batching nearly halves the cost of the same car and the same driver.
Small orders are where you lose
Now the same customer orders one box.
- Price: $9.00
- Loaded cost: $4.60
- Contribution: 9.00 − 4.60 = $4.40
With a courier at $8.00, you lose 4.40 − 8.00 = $3.60 on that order. With the app at 30%, you pay 9.00 × 0.30 = $2.70 and keep $1.70. A flat fee punishes small orders; a percentage punishes large ones.
To find your minimum order with a flat delivery cost, divide the delivery cost by the contribution of one unit. Each box leaves you $4.40. With an $8.00 courier: 8.00 ÷ 4.40 = 1.8. You need at least two boxes just to pay the courier, and more to make anything.
Charging the customer for delivery
If you charge a delivery fee, subtract it from the delivery cost. Charge $4.00 on a $15.00 single trip and delivery costs you 15.00 − 4.00 = $11.00 per order. You can charge by area, set a minimum order, or deliver free above a certain spend. Any of these works once you know what each delivery costs you in each area.
Three things to check each month:
- How many orders went out alone and how many were batched.
- The average cost per delivery for each option.
- How much of your total contribution went on delivery.
Do it with the calculator
Put your recipe into the food cost calculator to get the loaded cost per unit, then add the delivery cost to the order to see what you keep with each way of delivering.
Frequently asked questions
How much should I charge customers for delivery?
Start from what one delivery costs you in each area. Whatever the customer pays comes off that cost; anything you do not charge comes out of your margin, so know how much it is.
Is a courier cheaper than a delivery app?
It depends on order size. A courier charges a flat fee per drop, which hurts small orders. An app takes a percentage, which hurts large orders. Run both against your real orders.
If I deliver myself, is delivery free?
No. You pay for fuel, wear on the car and the time you could have spent baking or selling. Put an hourly value on your time and include it.
How do I bring the cost per delivery down?
Batch orders by area and time slot, and set a minimum order for delivery. One route with four drops costs far less per order than four separate trips.