Have Delivery Fees Taken a Bite Out of Restaurant Industry Sales?

Jan 30, 2023 | Finconomics 101, No Bull Economics

Delivery fees are not cheap & can represent multiples of the menu item price. Although there is an argument to be made that delivery marketplaces can expand a restaurant’s marketing reach, there is a price to be paid in terms of industry sales cannibalization

Key Points

With DoorDash’s marketplace sales (which include menu mark-ups, delivery fees & tips) apparently settling in at a ~6% mix of total restaurant industry sales after the covid growth spike, restaurant operators should consider how much delivery fees may be cannibalizing their business.

As an example, an order for a SuperSonic Double burger ($5.99 on the website) costs $15.31 for delivery. This delivery customer transfers $9 in discretionary purchasing power from the $15 order to DoorDash (60%) which could have been spent on incremental drive-thru menu orders. To put this in perspective, 60% of DoorDash’s global $42B marketplace sales ($25B) during 2021 may have come back in part to restaurant operators. That’s a big number representing roughly 2x Taco Bell’s domestic system sales!

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