If Your Fast Food Order Seems Way More Expensive on Delivery Apps, It Probably Is
The delivery boom has been a double-edged sword for restaurants. Eateries revel in the additional revenue but loath the lower profits after delivery providers take their cut—to the point where many cities have been cracking down on how much companies like DoorDash and Grubhub can charge restaurants. That’s not to say options don’t exist for boosting margins: Restaurants can charge service or other fees. Or they can simply charge more for food being delivered than they do for takeout or dining in—something that is apparently increasingly common for many large chains.
A report from analysts at Gordon Haskett which looked at the pricing at 25 different restaurant chains found that fast food menu prices are 15.3 percent higher for delivery compared to pick-up, according to Business Insider. Chick-fil-A was found to have the largest difference—29.8 percent higher—while America’s most prominent chains, McDonald’s and Starbucks, had delivery menu prices that were 19.6 percent and 20.3 percent higher respectively. Specifically looking at Chick-fil-A, Business Insider found markups at individual locations that increased the cost of a chicken sandwich by over a dollar. And keep in mind, these higher prices are in addition to any service or delivery fees that may be charged on an order (though the recipient of this money can sometimes be unclear).
Meanwhile, casual dining restaurants—which already have higher prices than fast food—tended to increase their delivery prices by a lower margin: According to Gordon Haskett, chains such as Chili’s, Outback, and Applebee’s reportedly only had an average price increase of 2.9 percent for delivery, with some choosing not to raise prices at all.
Reached for comment, a Starbucks spokesperson told me potentially higher delivery prices are nothing new. “Since we began rolling out Starbucks Delivers more than two years ago, we have shared with customers on the Starbucks Delivers website and in the Uber Eats App that ‘Prices for Starbucks items purchased through UberEats may be higher than posted in stores or as marked,’” they stated. “Our approach to pricing has remained consistent since we started two years ago.”
And it’s easy to see why Starbucks and other chains would want to—or even need to—net more income on delivery orders. Business Insider cites analysist Jeff Farmer who dug into Chipotle’s pricing. On a $20 order, Farmer determined that Chipotle made $4.10 in profit, but add in a 15 percent commission from a delivery partner (with 15 percent being on the low end of the spectrum), and that store walks with just $1.10. A 30 percent commission—a number that has regularly been tossed around—could even result in a loss for the restaurant. Though Chipotle apparently hasn’t raised delivery prices yet, Farmer reportedly stated that it’s “a near certainty” the chain will be forced to do so in the future.