Restaurant Delivery Pricing and Fees: Restaurant customers are generally accepting of delivery fees, as long as those charges are seen as fair.

During the lockdowns, many restaurants couldn't have dine-in business so instead offered delivery and pickup. Unless the restaurant does the delivery itself, there are substantial commissions associated with offering delivery. Restaurant operators need to recover those costs, but must consider customers’ reactions to these delivery charges.

How should restaurants price their delivery? What sorts of delivery fees are acceptable? That's what our study was about.

Restaurant customers were generally accepting of delivery charges, as long as those charges are seen as fair. That is one conclusion of a survey of 329 U.S. residents who had used pickup and delivery, conducted during May and June 2020, by Sheryl E. Kimes and Chaoqun Chen.

One way to establish fairness is when restaurants state delivery charges as the “regular” price—with the lower cost of order pickup stated as a discount.

One particularly interesting finding was related to whether delivery was conducted by the restaurant or by a delivery provider. As part of the survey, we reminded half of the respondents that it costs restaurants money to use delivery firms. Those respondents were more likely to favor delivery by the restaurant itself, given the understanding that restaurants need to cover their costs.”

In terms of delivery charges, we found that our respondents generally considered flat fees or distance-based fees to be fair, On the other hand, hefty minimum-order requirements were not well received..

Here's the paper.

Sheryl E. Kimes, Ph.D., is professor emerita of operations management at the Cornell University School of Hotel Administration, Cornell SC Johnson College of Business, and a visiting professor of analytics and operations at the Business School at the National University of Singapore (sk@sherrikimes.com; sek6@cornell.edu). Her area of specialization is revenue management. She has been teaching, conducting research, and providing consulting services in this area for over 25 years. She has published over 100 articles and book chapters and has received multiple awards for her research including the Lifetime Achievement Award by the College of Service Operations of the Production and Operations Management Society and the Industry Relevance Award by the Cornell University Center for Hospitality Research in 2010, 2012, and 2014. In 2017, she was given the Hotel Sales and Marketing International Association Vanguard Award for Lifetime Achievement in Revenue Management. She was the third recipient of this award.

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