How to Calculate Your Real Restaurant Profit After Delivery Platform Fees

You know your food costs. You know your staff costs. You probably have a rough sense of your overall profit margin. But do you know your actual profit margin on delivery orders — after commissions, VAT on those commissions, service fees, refund clawbacks, and packaging costs are all accounted for?

Most UK restaurant owners either do not calculate delivery-specific profitability at all, or calculate it using the headline commission rate and miss the additional deductions that push the real cost significantly higher.

Why delivery profit margins differ from dine-in

Dine-in revenue goes straight to your bank (via your card processor) with a small processing fee. Delivery revenue passes through a platform that takes 15-35% commission, charges VAT on that commission, deducts service fees, subtracts refund clawbacks, and pays you a net lump sum — typically a week or more after the orders were fulfilled.

The difference in effective margin is substantial. Here is a side-by-side comparison for the same £25 meal:

That £25 order generates roughly half the gross margin when sold through a delivery platform compared to dine-in. And this calculation does not include refund clawbacks, which reduce the average further.

The hidden deductions most calculations miss

When restaurant owners calculate their delivery profitability, they typically account for the headline commission rate and food costs. These are the deductions that get missed:

1. VAT on commissions

Platform commissions are a service subject to VAT at the standard 20% rate. A 25% commission on a £25 order costs £6.25 plus £1.25 VAT — a total of £7.50, not £6.25. If you are VAT-registered, some of this is reclaimable as input tax, but only in proportion to your standard-rated delivery sales.

Our free VAT on Delivery Commissions Guide calculates the exact split for your sales mix.

2. Service and payment processing fees

Each platform charges additional fees beyond the headline commission — typically around 2.5% per order for payment processing. On £25, that is another £0.63. Small per order, but it compounds over hundreds of weekly orders.

3. Refund clawbacks

When a customer claims a refund, the platform deducts it from your next payout. You bear the cost even when the refund was triggered by a delivery issue. Refund rates of 2-5% of orders are commonly reported by UK restaurant operators in hospitality forums.

For a restaurant doing 200 delivery orders per week with a 3% refund rate and £18 average refund value, that is £108/week or roughly £5,600/year disappearing from your payouts. See our detailed breakdown of delivery platform refund costs for how to identify and challenge unjustified refunds.

4. Packaging costs

Delivery orders require packaging that dine-in does not: containers, bags, cutlery packs, tamper-evident seals, napkins. Industry figures vary widely, but £0.80-1.50 per order is a common range for independent UK restaurants. Over 200 weekly orders, that is £160-300/week in packaging alone.

5. Marketing and promotion opt-ins

If you have opted into platform marketing programmes (Deliveroo Marketer Plus, Uber Eats promotions, Just Eat boosted listings), those costs are deducted from your payouts on top of commission. These can range from a few pounds per week to significant sums depending on your promotional activity.

How to calculate your actual delivery profit margin

Here is a practical formula you can apply to your own numbers:

Step 1: Calculate gross delivery revenue

Sum all orders for the period from each platform's payout report. Use the gross order value (before any deductions), not the net payout amount.

Step 2: Calculate total platform costs

For each platform, add:

• Commission (gross orders x your commission rate)
• VAT on commission (commission x 20%)
• Service fees (gross orders x ~2.5%)
• Refund deductions (from payout report)
• Marketing/promotion costs (from payout report)
• Tablet rental (if applicable)

Step 3: Calculate delivery-specific costs

• Packaging costs (orders x average packaging cost per order)
• Any additional delivery-specific labour (if you have dedicated prep staff for delivery orders)

Step 4: Apply food and operating costs

• Food cost (gross orders x your food cost percentage)
• Allocated share of rent, utilities, insurance, staff (proportional to delivery as a percentage of total revenue)

Step 5: Calculate the margin

Delivery profit = Gross delivery revenue - Platform costs - Delivery-specific costs - Food costs - Allocated operating costs Delivery margin = Delivery profit / Gross delivery revenue x 100

A worked example

A UK restaurant doing £5,000/week in delivery orders across three platforms:

That 30.8% gross margin on delivery compares to roughly 55-65% on dine-in sales for the same food. The platform costs (commission + VAT + fees + refunds) account for 35.2% of gross revenue — more than the food cost itself.

When delivery is worth it (and when it is not)

The margin calculation above does not mean delivery is unprofitable — it means the margin is tighter and the volume needs to be higher to justify the infrastructure costs.

Delivery tends to be worth it when:

• You have excess kitchen capacity — delivery orders use capacity that would otherwise sit idle, so the marginal cost is lower than the fully allocated cost
• Your food cost percentage is below 30% — higher-margin items absorb the platform fees better
• Your refund rate is below 2% — keeping refunds low protects the margin
• You have negotiated commission rates — restaurants with higher volume often negotiate lower rates

Delivery is harder to justify when:

• Your food cost percentage is above 35% — the combined food + platform cost exceeds 70% of revenue
• Your average order value is low — platform fees are proportional, but packaging is fixed per order, so low-value orders are disproportionately expensive
• Your refund rate is above 4% — at this point refund clawbacks alone are consuming a meaningful share of your profit

Track it platform by platform

The overall delivery margin number hides significant variation between platforms. Commission rates differ, refund rates differ, average order values differ. Calculate the margin for each platform separately to identify which platforms are genuinely profitable for your restaurant.

Use our free commission calculator to see the per-platform cost breakdown before factoring in food and packaging.

---

This guide covers delivery platform profitability calculations for UK restaurants. Figures used in examples are illustrative — your actual margins depend on your specific commission rates, food costs, refund rates, and operating costs. This is not financial advice. Consult a qualified accountant for guidance on your specific business finances.

Sources

• HMRC VAT rates
• Platform Operators (Due Diligence and Reporting Requirements) Regulations 2023