Consumers Are OK With ‘Fair’ Food Delivery Fees

Flat or distance-based fees are viewed more favorably than minimum-order requirements, a survey finds.

July 31, 2020

ALBUQUERQUE, N.M.—During the lockdowns associated with the pandemic, many restaurants 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.

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.

“In terms of delivery charges, we found that our respondents generally considered flat fees or distance-based fees to be fair,” added Chen, who is an assistant professor at the Cox School of Business at Southern Methodist University. “On the other hand, hefty minimum-order requirements were not well received.”

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. These and other findings are found in “Consumer Perceptions of Restaurant Delivery Fees,” by Kimes and Chen.

“One particularly interesting finding was related to whether delivery was conducted by the restaurant or by a delivery provider,” said Kimes, who is professor emerita at the Cornell University School of Hotel Administration and a visiting professor at the National University of Singapore School of Business. “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.”

Many fast-food restaurants do post higher menu prices for delivery, with the average increase being more than 15%.