Aggregator commission: the real cost of an order

Aggregator commission is the share of each order that a delivery platform keeps in return for listing the venue, taking the order, processing the payment and, often, delivering the food. It is usually a percentage of the order value, it is deducted before the venue is paid, and it is easy to underestimate, because it never appears as a bill. The venue simply receives less than the guest paid.

On a single order, the commission looks like a reasonable price for a guest the venue might not otherwise have reached. Across a month of orders, and set against the food, packaging and other costs of each one, it often turns out to be the largest cost of selling food online, and sometimes larger than the profit left on the order.

This guide costs an order worth 25.00 line by line, first through a delivery platform and then through the venue's own site, side by side. It then doubles the order to show how the picture changes, looks at what aggregator commission does to the gross profit per dish, and covers delivery pricing, promotions and the decisions that follow. All rates and costs are illustrative; replace them with your own agreements and figures.

Delivery aggregators are platforms that list many restaurants in one app, take orders from guests and pass them to the venue. Most charge the venue a commission on each order, set as a percentage of the order value. The rate depends on the agreement, the market and the service: platforms that provide riders usually charge more than those where the venue delivers or the guest collects.

The commission pays for several things: the platform's marketing and app, the payment processing, customer service and, where included, the rider. Some agreements add further charges, such as fees for promotions, better placement in search results, tablets or the cost of refunds. Some platforms charge guests a delivery fee and a service fee as well, which the venue does not receive.

Because the commission is taken before the venue is paid, it is easy to lose sight of. The platform's statement shows what was deducted, but few venues add it up across the month or compare it with what each order actually leaves.

Here is an illustrative order worth 25.00 before tax: a main, a side and a drink. To keep the sums clear, the food and drink cost is 30 per cent of the order value, or 7.50, and packaging costs 1.20. The commission rates and costs below are examples, not quotes from any platform.

Through a delivery platform that supplies the rider, at an illustrative commission of 30 per cent:

Through the venue's own site, with delivery by a local courier paid per drop:

On a 25.00 order, direct delivery leaves 1.50 more than the platform. The difference is real, but smaller than many venues expect, because the fixed cost of delivery takes a large share of a small order.

Collection changes the sums, because nobody has to deliver the food.

Through a platform for collection only, at an illustrative commission of 15 per cent:

Through the venue's own site for collection:

On the same 25.00 order, what the venue keeps ranges from 8.80 to 15.30 depending only on the channel. Collection through the venue's own site leaves almost twice as much as delivery through a platform.

Now double the order to 50.00, with the same 30 per cent food cost (15.00) and slightly more packaging (1.80).

On the larger order, direct delivery leaves 8.40 more than the platform, against 1.50 more on the smaller one. The reason is simple. Aggregator commission is a percentage, so it grows with the order. Delivery by courier is closer to a fixed cost, so it shrinks as a share of a larger order.

That has a practical consequence. Commission hurts most on large orders, such as family meals and office lunches. Direct delivery struggles most on small orders, where the delivery cost is a large share of the value. Many venues set a minimum order for direct delivery for exactly this reason.

Another way to see aggregator commission is through a single dish. In the dining room, a burger priced at 14.00 before tax with a food cost of 4.20 has a gross profit per dish of 9.80. Through a delivering platform at 30 per cent, the commission takes 4.20, and packaging adds 0.60. The same burger now contributes 5.00, roughly half what it earns at a table.

Every dish loses margin in the same way. A dish with a high food cost, such as a steak, may contribute very little after commission; a dish with a low food cost, such as a pasta or a salad, keeps more. That is why the dishes that make sense on a delivery menu are not always the dishes that make the most money in the dining room.

Look at each dish's gross profit per dish after commission and packaging, not before. A delivery menu built from the dishes that still contribute well after the platform's share is a very different menu from the dining room's best sellers.

Platforms often encourage venues to run promotions: a percentage off, free delivery, a free item or a lower price for new guests. These can bring more orders, but the venue usually pays for them, and the commission is often calculated on the order value before or after the discount, depending on the agreement.

Take the 25.00 order with a 10 per cent discount funded by the venue. The guest pays 22.50. If the commission is 30 per cent of the discounted value, it is 6.75. After food and packaging of 8.70, the venue keeps 7.05, compared with 8.80 without the promotion. The promotion has cost 1.75 on this order, a fifth of the margin.

Promotions can be worth it if they bring guests who come back at full price, or who would not otherwise have ordered at all. Measure them: how many orders came with the promotion, how many of those guests ordered again, and what each order left after the discount.

Some venues set higher prices on delivery platforms than in the dining room or on their own site, to cover part of the commission. Raising the burger from 14.00 to 15.50 on the app, for example, recovers part of what the platform takes. Guests often expect delivery prices to be a little higher, and many venues price this way.

Check your agreement before doing so. Some platforms restrict price differences between their app and other channels, and the terms vary. Whatever you choose, keep prices accurate and consistent on each channel, and update them in one place when they change.

Delivery pricing also includes the minimum order and any small-order charge. A minimum order set at a level that covers the venue's costs protects the margin on small orders, especially for direct delivery where the courier cost is fixed.

The commission is not the only deduction. Read a month of platform statements line by line, and list every charge:

Some of these are fixed, some depend on orders and some depend on what goes wrong. Together, they can make the effective rate noticeably higher than the headline commission. Divide the total of all deductions by the total order value for the month, and you have the effective rate, which is the number to use in every sum.

Orders go wrong: an item is missing, a drink spills in the bag, the rider is late or the guest says the food arrived cold. On a platform, the guest usually complains to the platform, the platform refunds them, and the cost is often passed back to the venue, sometimes without much detail about what happened.

Track these deductions separately. A month in which refunds take a noticeable share of the platform's payout is a month with a problem worth finding: a dish that travels badly, a packing step that is skipped at busy times, or a rider handover that is too slow. Fixing the cause recovers the money and protects the venue's rating on the app.

On direct orders, the venue handles complaints itself. That costs time, but it also means the venue hears about every problem directly and can put it right in its own name, which often turns an unhappy guest into a loyal one.

Some operators run kitchens that exist only for delivery, often called dark kitchens or ghost kitchens, sometimes with several virtual brands from one kitchen. For these businesses, aggregators are usually the main source of orders, and aggregator commission is the cost that decides whether the model works at all.

The same line-by-line costing applies, with fewer costs on the other side: no dining room, often lower rent, and a menu designed for travel from the start. But the dependence on the platforms is complete, and changes in their rates, rules or search rankings go straight to the bottom line. Running the sums monthly is not optional for these kitchens; it is the business.

The commission buys an order, but it rarely buys a relationship. On most platforms, the venue sees little about the guest beyond the order itself, and cannot easily invite them back, thank them or tell them about a new dish. The platform keeps that relationship, and may use it to suggest other restaurants next time.

That is a cost in its own right, even though it never appears on a statement. A guest who orders twelve times a year through the platform pays commission on every order; the same guest ordering directly pays none, and can be recognised and looked after. The difference across a year can be larger than the difference on any single order.

None of this means delivery aggregators are a bad deal. They bring guests the venue might never reach, they provide riders the venue would otherwise have to find, and they handle payments and customer service. For a new venue, or one in an area with little passing trade, they may be the most effective way to build a delivery business.

The question is whether each order the platform brings is worth what it costs. An order from a new guest who later becomes a regular, ordering directly, may be very valuable. An order from a regular who would have ordered directly anyway is an order on which the venue has paid commission for nothing.

Look at where platform orders come from. If a large share come from guests who already know the venue, there is margin to be kept by moving them to direct ordering. Our guide to direct online ordering covers how to do that without losing the new guests the platform brings.

Direct ordering has its own costs, and a fair comparison counts them all. The ordering system, card fees, delivery by courier or the venue's own riders, the time spent managing orders and the marketing needed to bring guests to the venue's own page all belong in the sums.

Marketing is the cost most often forgotten. A platform brings guests to the venue; a direct ordering page has to be found. Every card in the bag, every social post and every email costs something, even if only time. If direct ordering needs a lot of paid advertising to bring guests, the margin advantage shrinks.

Staff time matters too. A direct order that goes wrong is the venue's to fix, with no platform customer service in between. Count the time it takes to answer questions, handle problems and keep the ordering page up to date.

To find the real cost of an order on each channel, you need a month of figures:

For each channel, subtract every cost from the order value and divide by the number of orders. The result is what each order really leaves. Compare channels on that figure, not on revenue, and repeat the sums every few months as rates, costs and order sizes change.

Here is an illustrative month for a venue taking 1,000 delivery orders worth an average of 30.00, to show the method. The rates and costs are examples.

If 150 of the platform orders came from regulars who could order directly, moving them would add about 1.90 per order at this order size, or about 285 a month, and more as the average order grows. The sums show both how much is at stake and why minimum orders matter for direct delivery.

servearound is built for the dining room rather than for delivery. Guests order from the table by scanning its QR code menu, and servearound does not take collection or delivery orders, so it is not one of the channels in these sums.

What it brings is the cost side of each dish. Dishes live in one library with their prices, and with the Analytics module, the menu report shows each dish's units, revenue and gross margin once its cost is set, with a cost coverage figure that shows how much of the revenue has a cost behind it. Those dish costs are the starting point for working out what each dish contributes after any platform's commission. See Analytics, and pricing for how servearound itself is priced per venue.

It varies widely by platform, market, agreement and whether the platform delivers. Use the effective rate from your own statements, including every fee, rather than a general figure.

Often, especially for venues with high volumes or several sites. Run the sums first so you know what rate would make the channel worthwhile.

Many venues do, where their agreements allow it. Check the terms, and keep every channel's prices accurate.

Because delivery is close to a fixed cost per order, it takes a large share of small orders. A minimum order helps.

Sometimes, if they bring guests who order again at full price. Measure repeat orders before running them again.

Dishes that travel well and still contribute after commission and packaging. Check each dish's margin after the platform's share.

Aggregator commission is a percentage of every order, deducted before the venue is paid, and it is often the largest cost of selling food online. Cost an order line by line through each channel: on a 25.00 order, the gap between a delivering platform and direct delivery is modest, because delivery is a fixed cost; on a 50.00 order, it is much wider, because commission grows with the order.

Look at gross profit per dish after commission, find the effective rate from every fee on the statement, measure promotions, and set delivery pricing and minimum orders deliberately. Keep delivery aggregators for the new guests they bring, move regulars to direct online ordering where the sums favour it, and run the numbers again every few months.