Your Fast Food Delivery Bill Is Higher Than Ever. Here's Why
Getting fast food delivered is a relatively new concept (outside of pizza, of which delivery has been a thing for a long time), so we will forgive you for not noticing if your bill has been slightly higher than it used to be. Business Insider reports that fast food chains on average charge 15.3 percent more for delivery orders when compared to the prices for pick-up or in-store orders — and this is even before any additional fees associated with delivery or tipping your driver come into play!
The outlet gives a few examples of this price difference, such as a Chick-fil-A chicken sandwich from one Atlanta, Georgia location, which costs $3.75 if ordered for pick-up and $4.85 when ordered through the chain's delivery partner Doordash. They state that research advisor group Gordon Haskett analyzed 25 fast food chains menus, and found Chick-fil-A to be charging the highest premium at 29.8 percent. Other chains like Starbucks and McDonald's were also discovered to be charging around 20 percent more for delivery orders placed through partner companies than if you ordered directly from the chain and picked up the food yourself at your nearest location.
Fast food chains are trying to recoup lost profits through higher delivery menu prices
Business Insider explains the need for this mark-up in prices for delivery, and it's not entirely based on greed. When using a third-party company like Doordash, Uber Eats, or GrubHub, fast food chains have to pay these delivery companies a portion of each sale. Since delivery has recently become such a huge part of the fast food business due to the coronavirus pandemic making it necessary to shut down indoor dining, these partnerships are seriously cutting into the fast food companies' profits through fees and commissions.
To illustrate this revenue loss, analyst Jeff Farmer used burrito-and-bowl chain Chipotle as an example. Farmer states that the company can expect to make about $4.10 off a pickup order of $20. For the same order placed for delivery through a third-party service, the chain will only make $1.10. If the company was trying to make the same amount of money on a delivery order as they do on pick-up, they would have to charge $10.35 for a burrito that costs $9 in-store.
This fee charge of 15 percent is even on the low-end of the industry standard, meaning that many other companies end up losing way more money on each order depending on how much the delivery company charges them versus how much labor, ingredients, and other costs add up to. Farmer says that both Uber Eats and GrubHub have been known to charge the restaurants they work with up to 30 percent per order.