Profitable Delivery: Recovering your costs with delivery zones and fees
Restaurant delivery has a price tag—often a substantial one. Profitable delivery relies on understanding and figure out ways to cover your standard costs. One common method is to charge a delivery fee.
Defining Delivery Zones
Depending on the size of your delivery area, your true costs for delivery will vary from address to address. Creating multiple zones keeps prices more affordable for customers ordering from locations close to the restaurant, and helps you recover your higher costs for delivery to customers further away.
Consider both geographical distance and travel time from your restaurant. Determine if certain areas have specific costs or features that add to delivery costs, such as tolls or downtown traffic. Combine areas with similar distance and travel time into one zone.
Calculating Delivery Fees
Do your fees cover associated labor, fuel, vehicle, and insurance expenses? Keep in mind that even Worker’s Compensation rates are higher for drivers while they’re on the road. If you can, determine fees based on these costs, and add a few cents as a cushion to protect your business in the event of sudden cost increases, such as a jump in fuel or insurance prices.
Set a schedule for reevaluating your delivery fees. As labor and gas prices increase, consider updating your delivery fees to keep pace.
Keep fees consistent between orders. In Driving Delivery Performance, Diana’s Cucina & Lounge owner Diana Cline advises setting up delivery zones and charges in your POS:
“Before we installed our SpeedLine POS, we would guess where our customers lived based on our knowledge of the area,” explains Diana, “and then charge them something we thought would work. But fees changed all the time. When we installed [it], we set up delivery zones and charges in the computer. All we have to do is press Delivery, and the computer charges the right amount. Customers are happy because they do not get overcharged. And we’re ecstatic because we’re collecting an extra $40K a year in delivery fees.”
SpeedLine customers can set independent delivery charges for each zone. Once the address for delivery has been added to the order, the appropriate charge is automatically applied.
Looking for more ways to increase delivery profitability? Download Profitable Restaurant Delivery: A POS Technology Field Guide.