Critical Points: The hidden costs of food delivery apps - The Points Guy (2024)

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Each week in his column "The Critical Points," TPG Loyalty and Engagement Editor Richard Kerr presents his opinion on a loyalty program, card product or recent news that he believes is overlooked, unsung or the result of groupthink taking mass opinion in a direction with which he doesn't agree. His goal is not necessarily to convince you to agree with his position but rather to induce critical thought for each of the topics and positions he covers.

When Chase announced changes to its popular Chase Sapphire Reserve card — including a higher annual fee along with the addition of Lyft benefits, DoorDash credits and a DashPass membership — I wanted to know the exact impact to cardholders. After all, a $100 increase in an annual fee should include a proportional boost to the card's value proposition. So I began scrolling through the local restaurants in DoorDash, and I quickly saw the prices listed through the app seemed to be noticeably high.

This (naturally) got me thinking about food delivery apps in general. The area I live in (south of the Atlanta metro area) only entered the service area for companies like DoorDash, Uber Eats and Grubhub within the last year. While I've used them a few times, I've always paid with Uber credits from The Platinum Card® from American Express or the monthly $10 in Grubhub credit from the American Express® Gold Card.

This has kept me from truly paying attention to the food prices and the overall amount I am paying for the convenience of food showing up at my house. I know that many people use these services daily, so I thought it'd be interesting to show how much these apps are really costing you.

The research

I decided to do a quick research project comparing the cost of food on a restaurant's own menu with the prices for the same food in the food delivery apps. I priced hypothetical meals for two people, then added in any stated service charges, applicable delivery fees and tax. Here are the results for four restaurants in my local area that are available on all three apps.

KFC

In this case, here are the premiums you're paying through the three delivery platforms:

• Uber Eats: 12.18%
• DoorDash: 51.08%
• Grubhub: 26.89%

Newk's Eatery

In this case, here are the premiums you're paying through the three delivery platforms:

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• Uber Eats: 19.97%
• DoorDash: 9.03%
• Grubhub: 44.95%

Hooters

In this case, here are the premiums you're paying through the three delivery platforms:

• Uber Eats: 17.45%
• DoorDash: 17.17%
• Grubhub: 24.76%

O'Charley's

In this case, here are the premiums you're paying through the three delivery platforms:

• Uber Eats: 20.04%
• DoorDash: 9.76%
• Grubhub: 10.29%

Now, it's worth noting that the above charts do not reflect two important points:

1. If you are ordering just for yourself, you likely won't meet order minimums, which mean you'd incur a small order fee in addition to the above costs. It could also render your DashPass useless, because you didn't meet the minimum order amount for free delivery.
2. If you typically tip on these services, the price difference will be that much more for you.

Key takeaways

Based on the above results for the four restaurants that were in all three platforms in my local area, here are some key data takeaways:

• The platforms were (on average) 22% more expensive than ordering directly from the restaurant for table service or take out.
• Based on averages, Uber Eats carried the smallest premium (17.4% more expensive than ordering directly from a restaurant), followed by DoorDash (21.8%) and Grubhub (26.7%) — again, not including any tip.
• The variation among the data was dramatic for both DoorDash (a low of 9.03% and a high of 51.08%) and Grubhub (10.29% to 44.95%), whereas Uber Eats was the most consistent.
• Grubhub taxes the service fee and delivery fee at the same rate as the food cost, while Uber Eats and DoorDash do not.

Paying a 17-27% premium to have food delivered directly to you may seem like a fair deal for the convenience factor, but sadly, there are outliers that go far beyond these reasonable levels.

The Chick-fil-A case

If you really want to see how egregious your food cost could be from a food delivery app, take the strange case of Chick-fil-A on DoorDash. In the DoorDash app, there is (oddly) no combo meal available for ordering. If you want a sandwich, fries and drink, you have to order them individually. These items are also priced much higher than ordering directly through the Chick-fil-A app.

If you want to order a combo meal for yourself on the Chick-fil-A app, it would be $7.05 (including tax) here in Georgia:

If you wanted the same items ordered via DoorDash, your total would end up being $19.14 after all fees, tax and a $3 tip. Here's how the math works out:

If you do the math, ordering a Chick-fil-A meal through DoorDash would cost you 171% more here in Georgia than ordering directly from the restaurant. Is that worth the convenience?

Promotions can save the day

The great equalizer to these costs is the set of promotions and discounts that the apps seem to have on a regular basis. Around the holidays, Uber Eats had 30% and 50% off promos every week, making your costs equal to or even lower than what they would be in restaurant. There are plenty of promos for first time customers, so if you haven't signed up for any of these (Postmates, etc). make sure you take the time to find the portal or code that makes your first order even cheaper. Unfortunately, many promotions for existing users through portals or card-linked programs are rather measly (1-2%) and typically not worth going out of the way to earn the credit.

Further potential problems

Of course, the costs associated with these services is just one factor in deciding whether or not to use them. I've had some good and bad delivery experiences with food apps since they became available in my neighborhood. The most frequent problem is food that arrives cold, because your driver has multiple orders to deliver and doesn't use a hot bag.

I've also encountered very lengthy delivery times that don't match the original estimate, and I've also received incomplete or flat-out wrong orders. In a couple of instances, I've driven back to the restaurant myself after receiving my delivery order, because the order has been entirely wrong or full entrees are missing. This obviously defeats the purpose of a food delivery service.

Finally — and probably most disturbingly — a study by U.S. Foods found that almost 30% of food delivery drivers admitted to tasting the food they were delivering.

Bottom line

I'm the first to admit that a sample size of four restaurants doesn't make my quick research a fully-fledged statistical analysis, but I am confident you would see similar results across all restaurants if you continued the comparisons. I completely understand and am often willing to pay a premium when ordering through an app. It's clearly less hassle than getting the kids in the car to pick something up or trying to scramble and cook the second we get home from tennis lessons.

On the other hand, there are routinely wrong orders, significant variation in costs (as shown in the some of the above examples) and the chance that a few of my fries may be missing when my order shows up. All of this has refocused my attention on just how much I am paying for the convenience factor of food delivery apps. This isn't to say that there's no place for them, but it's critical to do your due diligence to make sure you aren't overpaying for a service that isn't worth it.

Do you know how much these apps are really costing you?