This just-right delivery fee can double your sales

Nov 17, 2023

As convenient as delivery is for diners, high fees can prevent them from making it a habit. Restaurants who want to keep diners hooked should offer value as well as ease–but not at the cost of their own profits.

Finding the right balance doesn’t have to be a riddle. A sweet spot for delivery fees does exist, and it can double your sales while making diners feel like they scored a deal. Here’s what the research says.

Finding the tipping point

Staying ahead of diner expectations can help you lock in loyal guests, but what prices do customers expect for delivery? It turns out that sticker shock kicks in at $4.

A Cornell 2021 study found that diners started to feel more positive towards fees when they dropped below $4–and when delivery fees on ChowNow are 3.99 or less, restaurants get more traction with diners. Beyond keeping diners happy, minimizing your fees can play an important role in the checkout process, too.

Clearing the final hurdle

Matching fees to your diners’ expectations helps your conversion rates–or the chances that a diner will take their order all the way to check out. It’s no surprise, then, that the number one reason diners won’t check out is because they feel that the additional cost is too high. Our own data shows that when restaurants set delivery fees over $5, diner checkout rates drop by 8%.  That’s 80 lost orders for restaurants serving a thousand orders a month.

Luckily, 40% of takeout guests in our industry said they’d order more frequently if they had less expensive options. So, setting your delivery fees to the friendlier price of $3.99 will encourage diners to complete their orders and confirm an additional sale.

The proof is in the pricing

Here’s how different delivery prices impact restaurant sales on ChowNow, using a $36 average order value. Diners who value convenience the most will still pay full price for delivery, but reducing fees to $3.99 will appeal to an even wider customer base.

For restaurants with higher average ticket sizes, diners are likely to tolerate some flexibility above $3.99. When average orders are $50 or higher, the sweet spot for delivery fees can be higher, but ideally capped at 8% of an order’s total for the best results.

A flat rate provider like ChowNow’s Flex delivery can lock in your costs at $3.99 per order —the perfect balance between diner expectations and orders. For most restaurants, it’s the magic number that works in everyone’s favor — mystery solved.

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