Restaurant Delivery Commission and Profit Margin Guide

The right unit is channel contribution

Contribution is the amount left after order-driven costs to help cover fixed costs and profit. It is not net profit. Rent, general management, tax, debt service, owner pay and other period expenses may still sit outside an item-level calculation. Keep that distinction visible so an attractive order-level percentage is not mistaken for the final result on the income statement.

Use one period and one definition of sales for all three channels:

The final line is a period view, not a reason to load every restaurant overhead cost into one order. If a channel has a dedicated contract, service, equipment or other fixed charge, record it in the period report and state how it is allocated. For item decisions, preserve the before-fixed contribution alongside the after-fixed channel result.

• **Net sales** = the restaurant's sales after restaurant-funded discounts and credits. Record those discounts separately as an audit field, but do not subtract them twice.
• **Order-driven channel costs** = commission or marketplace fees, payment fees, food cost from the actual recipe and portion, packaging, refunds, errors and remakes, plus incremental kitchen, packing, dispatch or customer-service labour.
• **Contribution dollars before channel-specific fixed costs** = net sales minus the order-driven channel costs.
• **Contribution margin percentage** = contribution dollars before channel-specific fixed costs divided by net sales, multiplied by 100.
• **Channel result after fixed costs** = the period's total contribution dollars minus fixed costs that belong specifically to that channel. Allocate those fixed costs only when the allocation rule is explicit.

The ACCEPT framework for a channel decision

The following framework turns a fee calculation into an operating decision. It is deliberately item-level: a channel can be useful for one dish and unhelpful for another.

1. **Align the sales base.** Use net sales that reflect restaurant-funded discounts and credits. Do not compare a delivery order after adjustments with a dine-in figure that still includes a discount, or mix tax and non-tax amounts. 2. **Capture every order-driven cost.** Reconcile the statement or payment report, then add the less visible costs: containers, seals, bags, remakes, refunds and the minutes added to the kitchen or handoff. 3. **Compare like with like.** Create a dine-in, pickup and delivery row for the same item and period. Keep recipe cost and portion definitions consistent, while allowing channel-specific packaging, labour and fees to differ. 4. **Examine capacity and displacement.** Mark whether the order uses spare capacity, consumes a constrained station or displaces a higher-contribution sale. The same contribution dollars can have different operating value at different times. 5. **Protect travel quality.** Record whether the item arrives in the condition your own quality standard requires. A number that looks acceptable is not a reason to offer an item that cannot travel reliably. 6. **Take one bounded action.** Choose keep, reprice, restrict or test. Give a test one owner, one review date and a defined decision rule rather than changing several inputs at once.

This sequence prevents the commission rate from becoming the whole analysis. It also keeps a positive result in context: an item may contribute on paper but still need a time window, packaging change or channel restriction.

Three-channel contribution scorecard

Copy the following pair of tables for every item under review. The row key is **item + channel + period**. Keep all three rows even when a channel is not currently offered; a blank or `not offered` entry is more useful than silently treating the channel as zero demand.

Input worksheet.

| Item | Channel | Period | Net sales after restaurant-funded discounts/credits | Commission and payment fees | Food cost | Packaging | Discounts/credits (audit field) | Refunds/errors/remakes | Incremental labour | Channel-specific fixed-cost allocation | |---|---|---|---:|---:|---:|---:|---:|---:|---:|---:| | [item 1] | Dine-in | [period] | [enter] | [enter] | [enter] | [enter] | [enter] | [enter] | [enter] | [enter or —] | | [item 1] | Pickup | [period] | [enter] | [enter] | [enter] | [enter] | [enter] | [enter] | [enter] | [enter or —] | | [item 1] | Delivery | [period] | [enter] | [enter] | [enter] | [enter] | [enter] | [enter] | [enter] | [enter or —] |

Use the same currency and period throughout. If net sales already include the restaurant-funded discount or credit, the audit field shows its size and the formula does not deduct it again. If a fee is charged on a different base from net sales, enter the actual fee from the relevant statement rather than applying an assumed rate.

Output and decision fields.

| Item | Channel | Contribution before fixed costs | Contribution margin % | Channel result after fixed costs | Capacity state | Travel quality | Test owner | Review date | Action | |---|---|---:|---:|---:|---|---|---|---|---| | [item 1] | Dine-in | [calculate] | [calculate] | [calculate if allocated] | [enter] | [enter] | [enter] | [enter] | [keep/reprice/restrict/test] | | [item 1] | Pickup | [calculate] | [calculate] | [calculate if allocated] | [enter] | [enter] | [enter] | [enter] | [keep/reprice/restrict/test] | | [item 1] | Delivery | [calculate] | [calculate] | [calculate if allocated] | [enter] | [enter] | [enter] | [enter] | [keep/reprice/restrict/test] |

Calculate the outputs as follows:

```text Contribution before fixed costs = net sales - commission and payment fees - food cost - packaging - refunds/errors/remakes - incremental labour

Contribution margin % = contribution before fixed costs / net sales × 100

Channel result after fixed costs = total contribution before fixed costs for the channel - channel-specific fixed costs for the period ```

The discounts/credits audit field is already reflected in net sales. The fixed-cost allocation is not part of the before-fixed contribution formula; it is a separate period view. This two-layer approach makes it possible to see whether a weak result comes from the order itself, the channel's fixed burden or both.

For the decision fields, use controlled labels rather than prose that changes from one review to the next. For example, capacity can be `spare`, `mixed` or `constrained`; travel quality can be `holds`, `needs review` or `does not hold`; and the action can be `KEEP`, `REPRICE`, `RESTRICT` or `TEST`. A delivery item with poor travel quality can be restricted even when its arithmetic contribution is positive. A low-confidence calculation should normally be tested or reconciled before a permanent menu change.

Example: one item and one delivery order

This is an illustrative calculation framework, not a benchmark or a claim about any restaurant. It uses a simple illustrative example so the arithmetic is transparent: net delivery sales of **$30** and total order-driven channel costs of **$23**. The $23 must be the sum of the line items in the worksheet—fees, food cost, packaging, refunds/errors/remakes and incremental labour—not a number copied into the model without reconciliation.

| Delivery row | Amount | |---|---:| | Net delivery sales after restaurant-funded discounts/credits | $30 | | Commission, payment fees, food cost, packaging, refunds/errors/remakes and incremental labour | $23 | | Contribution before channel-specific fixed costs | $7 | | Contribution margin percentage | $7 ÷ $30 = 23.3% | | Channel-specific fixed-cost allocation | Enter from the period report; not supplied in this illustration |

The useful conclusion is limited. This row leaves $7 before channel-specific fixed costs; it does not establish a target, a market norm or a final profit figure. Complete the dine-in and pickup rows for the same item before choosing the channel. If the delivery row fills unused capacity and the item arrives in good condition, `KEEP` may be reasonable. If it occupies a constrained station during a busy period, compare the contribution it replaces before accepting more volume. If the $23 cannot be reconciled, choose `TEST` or `RECONCILE`, not `REPRICE` based on a guess.

To make the example operational, add a capacity state, travel-quality result, owner and review date. For example, the row should not leave those cells blank simply because the arithmetic is complete. A numeric result answers the cost question; it does not answer whether the item belongs on the channel at a particular time.

Decision table: choose the next action

Use this table after the data has been reconciled. It is a decision aid, not a substitute for the operator's own capacity and quality observations.

| What the scorecard shows | Capacity or quality context | Next action | What to document | |---|---|---|---| | Contribution is positive and inputs reconcile | Spare capacity; travel quality holds | **KEEP** | Channel, daypart or item scope; next review date | | Contribution is positive but the item competes for a constrained station | Peak service or likely displacement | **RESTRICT** | Allowed time window, item availability and displacement assumption | | Contribution is weak because price, packaging or restaurant-funded promotion does not cover the channel cost | Travel quality holds and customer value can be reviewed | **REPRICE** | Input changed, affected channel, effective date and review measure | | The item may contribute, but fee basis, labour minutes, refund cost or travel quality is uncertain | Evidence is incomplete or mixed | **TEST** | One owner, one change, comparison period and stop/review rule | | Contribution is negative after the statement, recipe and portion data are checked | Quality also does not hold, or the channel cannot fit capacity | **RESTRICT** | Why the item is unavailable on this channel and what would reopen the decision | | A positive row has recurring error or remake costs | The cause is operational rather than clearly a price issue | **TEST** | Accuracy or packaging change, owner, review date and resulting cost fields |

“Reprice” is not an automatic instruction to raise every price. A channel-specific price, a different package, removal of a restaurant-funded discount, a minimum basket rule or a narrower delivery menu may each change the arithmetic. Select the least disruptive change that addresses the verified cost, then review the result using the same definitions.

Pricing and menu choices that protect the calculation

Price is only one lever. Start with items whose portions are repeatable and whose travel quality is understood. If the cost of a container, seal or bag belongs to a particular item, put it in that item's row. If it belongs to the whole channel, allocate it using a documented rule and retain the unallocated period total for review.

A single price across dine-in, pickup and delivery can be simple, but simplicity does not make the economics equal. You can compare a common price across channels, use a channel-specific menu, limit selected items or present an order charge where that is appropriate for the operation and clearly communicated. The scorecard should show the effect of each choice rather than assuming one structure is right for every dish.

Avoid using a broad promotion to conceal an item that already has weak contribution. First identify whether the pressure comes from the fee, the recipe, the package, the portion, the labour handoff or a refund pattern. Then choose a change that can be observed. Review the menu when any of those inputs changes, including channel terms, packaging prices, recipe costs, wage costs or promotion funding.

A delivery menu also needs an operational owner. Someone should reconcile channel statements, maintain item availability, review refunds and errors, and connect the financial line to the kitchen handoff. Standardised recipes, packing instructions and a final order check can make the cost fields more dependable, but record the local result rather than assuming an operating change paid for itself.

Implementation steps

1. **Choose the review window.** Use a period for which sales, fees, recipe costs, packaging and labour records can be aligned. Write down whether figures are per order, per item, per daypart or for the full period. 2. **Define the sales base.** Confirm whether net sales exclude restaurant-funded discounts and credits, and whether tax or customer-paid delivery charges sit outside the restaurant's sales figure. Apply the same rule to all channels. 3. **Reconcile the statements.** Match channel or payment statements with point-of-sale records. Enter actual commissions and payment fees, including adjustments, rather than using a remembered or advertised rate. 4. **Cost the item.** Use the current recipe, portion and usable ingredient cost. Add the package used for that channel, plus refunds, errors, remakes and incremental labour supported by your records. 5. **Create three rows.** Add dine-in, pickup and delivery for each item. If a row is not offered, mark it clearly and do not treat the absence of sales as evidence that the channel would be profitable or unprofitable. 6. **Separate contribution from overhead.** Calculate before-fixed contribution first. Add channel-specific fixed costs in the period view with an explicit allocation rule; leave general overhead in the broader profit review. 7. **Record context.** Mark capacity state, travel quality, platform or daypart where relevant, owner and review date. These fields stop the percentage from being read without its operating conditions. 8. **Choose one action.** Keep, reprice, restrict or test. When testing, change one material input or process at a time where practical and compare equivalent periods or item groups. 9. **Review the bridge.** At the next review, explain movements in fees, food cost, packaging, discounts, refunds and labour separately. Update the row when costs or channel terms change.

For the underlying menu numbers, [RestaurantMargin's free margin workspace](https://restaurantmargin.com/) can organise ingredient cost, selling price and weekly sales alongside food-cost and contribution measures. Keep the channel-specific fees, packaging, refunds, labour and capacity fields in the scorecard as well; a general menu calculation does not replace the channel comparison.

Limitations

• **Contribution is not net profit.** The worksheet does not by itself account for all fixed overhead, tax, financing, owner compensation or other period expenses. Use the after-fixed channel view and the restaurant's wider accounts before making a business-wide conclusion.
• **A fixed-cost allocation is a convention.** Different allocation rules can change an item's after-fixed result. Show the rule, preserve the before-fixed contribution and avoid presenting an allocation as a directly observed order cost.
• **Short periods can mislead.** A small mix of orders may contain an unusual item, refund or labour event. Compare like periods and keep the underlying rows so a single blended percentage does not hide the cause.
• **Capacity changes the alternative.** The worksheet measures the selected channel, not the contribution that would have come from a different order using the same station, table, courier handoff or staff time. Record displacement as an operating assumption and revisit it.
• **Travel quality is local.** Packaging, distance, holding time and menu design differ by operation. The scorecard cannot establish quality from arithmetic; the operator must record the result using a consistent local review.
• **Attribution is imperfect.** Order data may not show whether a delivery sale is additional demand or a shift from pickup or dine-in. Treat that question as uncertain unless the operation has a reliable way to observe it.
• **No universal threshold is supplied.** Set the action threshold from the contribution needed by your operation, its capacity constraints and its customer-value decisions. Do not import a percentage from another restaurant as if it were local evidence.