Locations & Franchise
Third-Party Delivery: New Business or Your Own Sales With a Commission?
“Between the commissions and the packaging, is third-party delivery actually making us money?”
Third-party delivery is profitable when its orders are incremental, customers you would not have served otherwise, and a margin problem when it mostly shifts your own dine-in and pickup business into a channel that pays a commission on every order. The commission is certain; the incrementality is not, and it varies enormously by store, market, and daypart. Quantiiv measures it from your transaction data: what happened to your direct channels as 3PD grew, how baskets and margins differ by channel, and which stores' delivery business is genuinely additive.
Pricing is the lever most brands underuse. Delivery-menu premiums are widely accepted by customers and materially change channel economics, but they should be set with the same elasticity discipline as in-store prices. The channel answer is rarely all-in or all-out; it is a store-by-store, price-by-price position based on what the data says each market's delivery demand is worth.
Sound Familiar?
Channel growth that might just be channel shift
Delivery sales climb and the topline looks fine, while dine-in quietly erodes underneath. If the same customers moved channels, the brand now pays a commission on business it used to keep whole.
Delivery menus priced like the dining room
Many brands run identical prices across channels, absorbing the full commission out of margin. Others apply a premium picked by round number, with no read on what delivery customers will actually bear.
One decision applied to very different stores
3PD economics differ sharply by market: some stores reach genuinely new customers through the marketplaces, others cannibalize themselves. A single system-wide policy is wrong for a large share of stores in either direction.
How Quantiiv Answers It
- 1
Build the true channel P&L
Each channel's revenue, commissions, basket composition, and margin profile, by store. Delivery baskets differ from dine-in baskets in size and mix, and the P&L reflects what actually sells there, not blended averages.
- 2
Measure incrementality, not just growth
Direct-channel trajectories are compared against their expected paths as 3PD volume grew, store by store. Where identity data exists, customer overlap across channels shows directly whether delivery recruited new customers or moved existing ones.
- 3
Read delivery demand's price tolerance
Delivery-channel price sensitivity is measured separately from in-store, because it is usually different. That read sets how much channel premium each market bears before orders fall off.
- 4
Set the channel position store by store
The output is a per-store stance: where delivery is additive and worth feeding, where premiums should recover commission, and where the marketplace is mostly taxing your own customers and deserves a different strategy.
- 5
Recheck as the mix moves
Marketplace dynamics, commission structures, and customer habits shift. The channel read is refreshed on a cadence so the position tracks reality rather than the year it was set.
Why Quantiiv
Incrementality measured, not assumed
The entire 3PD debate turns on whether delivery orders are new. That is an empirical question, and it gets an empirical answer, store by store.
Channel pricing with elasticity discipline
Delivery premiums are set from measured channel price sensitivity, the same way in-store prices are, instead of by rule of thumb.
Frequently Asked Questions
Should restaurant prices be higher on delivery apps?
Usually yes. Delivery customers are paying for convenience and generally accept a menu premium, which is the cleanest way to recover commission costs. The right premium size varies by brand and market and should come from measured delivery-channel price sensitivity, because a premium set too high pushes orders off the channel entirely.
How do you know if delivery orders are incremental?
Two reads. At the store level, compare direct-channel sales against their expected trajectory as delivery volume grew; if dine-in and pickup fell below trend while 3PD rose, the channel is partly shifting your own business. At the customer level, where identity data exists, overlap between delivery customers and your existing customer base answers it directly.
Is third-party delivery worth the commission?
It depends on the incrementality rate, the delivery basket's margin after the commission, and what premium the channel bears, all of which vary by store. Marketplaces that reach customers a store could not otherwise serve are usually worth it even at full commission; marketplaces mostly intermediating existing customers are not, and pricing or channel strategy should respond.
What about first-party delivery?
The same analysis frames that decision: if a meaningful share of your 3PD volume is your own loyal customers, shifting them to first-party ordering, where you keep the margin and the customer relationship, has measurable value, and the data shows how much before you invest in building the channel.
Related Problems We Solve
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“We drive traffic to our ordering site. Where do we lose people, and is our digital marketing actually producing orders?”
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“Should all of our locations really charge the same prices?”
Read moreMenu Engineering
“Which items actually drive our revenue and margin, and how should the menu change?”
Read moreStop Fighting Your Data.
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