Delivery Platforms Are Eating Your Margins. Here's the Maths.

You've probably been told that getting your brand on Uber Eats or Just Eat is a no-brainer. More orders. More revenue. More customers discovering you. And on the surface, the logic seems sound.

It isn't.

For most hospitality franchise operators, delivery platforms are not a revenue opportunity. They are a margin problem dressed up as one. And before you sign a franchise agreement that expects platform participation, you need to understand the numbers.

What the platforms actually charge

Uber Eats, Just Eat, and Deliveroo — which between them control roughly 68% of the UK food delivery market — charge commission rates of between 15% and 30% of the order value. The exact rate depends on your contract, your brand's negotiating position, and which tier of service you are on.

That is not a small number. That is, in many cases, your entire net margin — and then some.

Here is the basic arithmetic. A typical hospitality franchise unit operating at reasonable efficiency will have food and labour costs accounting for somewhere between 55% and 65% of revenue. Add royalties (typically 4–8% of gross sales), rent, utilities, and other fixed costs, and a well-run unit might land at a net operating margin of 10–20%.

Now apply a 25% delivery commission on top of that.

On a £20 delivery order, the platform takes £5. Your food cost on that order is probably £6–7. Your labour attribution, packaging, and the royalty on that sale might add another £3–4. You have made nothing. On a bad month, you have lost money on every single delivery order you fulfilled.

The royalty compounding problem

There is a detail that makes this worse, and it is one that most prospective franchisees do not clock until they are already trading.

Your royalty is calculated on gross sales, not profit. That means if you do £10,000 in delivery revenue in a month, you owe the franchisor their percentage of the full £10,000, regardless of what the platform has already taken. The royalty and the platform commission are not alternatives. They stack.

A 6% royalty on £10,000 of delivery revenue costs you £600. The platform has already taken £2,000–£2,500. You have spent £2,600–£3,100 before you have paid for a single ingredient, a single member of staff, or a single hour of your own time.

This is the maths that franchise projections frequently do not show you.

What the brands that pulled back are telling you

KFC exited Deliveroo in October 2024. Tortilla ended its Deliveroo partnership citing direct margin impact. These are not small operators making reactive decisions — they are sophisticated franchise networks with dedicated finance teams, and they concluded that platform participation was destroying value.

The signal is worth paying attention to.

Meanwhile, there is a quietly significant statistic on the consumer side: customers spend 35% more on average when ordering directly from a restaurant than when ordering through a platform. The platforms are not just expensive to use — they actively compress the order value by commoditising the transaction and training customers to compare on price.

Brands that have invested in owned app infrastructure and direct ordering channels give their franchisees a material advantage. Brands that have not are, in effect, asking franchisees to subsidise the platforms indefinitely.

The questions to ask before you sign

If you are evaluating a QSR or food franchise that expects delivery participation, these are the specific questions that should have specific answers before you sign anything:

• What commission rate does the brand have negotiated with each platform? Some large networks have secured better rates. Most have not. You need the actual number, not a range.
• Is platform participation mandatory under the franchise agreement? Some brands require it contractually. If they do, the delivery margin hit is not a choice — it is a structural cost built into your operation.
• What is the brand's strategy on owned delivery channels? A brand that is actively investing in direct ordering has a plan. A brand that is not has a problem it is passing to franchisees.
• What does the unit economics model show on a delivery-heavy week versus a dine-in-heavy week? If the franchisor's projections do not model this separately, ask why. The answer will tell you how closely they have looked at their own numbers.
• What do existing franchisees in delivery-heavy locations actually say? Ask to speak to franchisees who are doing significant delivery volume — not the ones the brand nominates. Ask for the full list and pick your own.

The honest summary

Delivery platforms can work for some brands in some locations with the right contract terms and a clear owned-channel strategy alongside them. They are not inherently disqualifying. But they are not passive revenue either, and they should never be treated as a bonus on top of your core model.

If a brand's financial projections include delivery revenue without explicitly accounting for platform commission, that is not an oversight. It is a gap in the analysis you are being asked to rely on.

At Franchise Foundry, the delivery channel economics of any brand we work with are a standard part of what we review with every candidate before any introduction takes place. Some brands have this figured out. Others are still working through it. You should know which category you are dealing with before you sign.

If you want to work through the numbers on a specific brand you are considering, start with Find Your Match or get in touch directly.