What to consider before partnering with a third-party delivery service for your restaurant

Are you considering third-party delivery apps like UberEats, GrubHub & DoorDash for your restaurant? Not sure about details like commissions, pricing structure and taxes how to make these services as profitable as possible? Read our article below to understand more about how you can make your partnership with third-party delivery apps a profitable one.

How third-party delivery apps can help your restaurant business?

Third-party delivery apps like UberEats, GrubHub & DoorDash helps restaurant businesses by expanding their customer reach beyond the physical location, enabling restaurants to serve customers who prefer delivery. It provides an additional revenue stream by allowing restaurants to tap into the growing demand for food delivery. Delivery apps also handle logistics, including delivery personnel, order tracking, and customer service, which can reduce the operational burden on restaurant staff. Additionally, delivery apps offer marketing support through promotions and visibility on its platform, helping restaurants attract new customers.

How will your restaurant receive orders from delivery apps?

Some third-party delivery apps can send orders via your POS system. In this case, delivery apps are integrated to your POS and orders are sent straight from delivery app to POS to your kitchen. This approach reduces the risk of human error.

Delivery apps can also be installed on a tablet or device of your choice. Delivery apps typically can also provide the tablet on monthly rent. You will receive orders from delivery app on the tablet via notifications so you must keep the tablet in an easily accessible location.

What pricing structure do you need to have with third-party delivery apps?

Third-party delivery apps usually charge a commission( ~30% or higher) on every order. It’s crucial to understand their pricing structure and negotiate favorable terms. for example, pricing on some platforms can vary based on opting for promotions or ads. Some platforms offer tiered pricing plans, allowing you to choose a package that aligns with your budget and sales volume.

The commission charged by delivery apps can eat into your profits, but there are ways to mitigate this impact. Some restaurants increase their menu prices on delivery apps to cover the cost of commissions. While this may raise the total cost for customers, it helps protect your margins. Additionally, offering exclusive deals or limited-time offers can drive more volume, offsetting the costs.

When using a third-party delivery service, be mindful of how taxes and fees are applied. Taxes are usually applied at total amount including delivery app commissions. These services typically handle the entire transaction, including collecting taxes. Ensure that you are compliant with local tax regulations and that the platform’s fee structure doesn’t erode your profits. Understanding the breakdown of fees will help you adjust your menu prices accordingly. To know how to price your menu item for a delivery app, download our delivery app price calculator.

What other costs you may have to consider while partnering with a a delivery app?

Packaging costs including containers and bags may be considered as part of your costs. A rough estimate is that packaging costs could be around 5% of the order. You should be be mindful of regulations on packaging containers and bags and be compliant to them. Also, chargeback fees ( for orders that the customer did not accept for either no delivery or wrong delivery) should be considered in your costs. Chargebacks are especially common with delivery apps with some estimates suggesting that as much as 3% of the overall orders on delivery apps get refund request.

To know how to price your menu item for a delivery app, download our delivery app price calculator.

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DISCLAIMER: This information is provided for general informational purposes only, and publication does not constitute an endorsement. Cactus does not warrant the accuracy or completeness of any information, text, graphics, links, or other items contained within this content. Cactus does not guarantee you will achieve any specific results if you follow any advice herein. It may be advisable for you to consult with a professional such as a lawyer, accountant, or business advisor for advice specific to your situation.