In the catering world, balancing operational costs and customer satisfaction is no small feat. One of the biggest challenges? Deciding how to charge for delivery. As the owner of Caterboss, Ireland's leading catering equipment supplier, I've seen firsthand how tricky this issue can be. My years of experience working in bars, restaurants, and take-aways have given me unique insight from both sides: on how businesses need to cover their costs while exceeding customer satisfaction.
This guide will cover:
By the end of this post, you’ll clearly understand how to charge for delivery in a way that works for both your business and your customers.
When I first entered the catering business, I was reluctant to charge for delivery, fearful customers might find it a step too far. However, over time, I realised that delivery fees are not just important—they're vital for a sustainable catering operation.
Delivery fees serve multiple critical purposes:
The key is to find the right balance—charge enough to cover costs and make a profit, but never too much to alienate the customer. It's a delicate balance and an important income stream, so mastering it is crucial for long-term success in the catering industry.
When advising catering businesses on setting delivery charges, I always emphasise the assessment of several different factors. Setting the charge doesn’t involve choosing an arbitrary number—a strategic and measured approach is necessary:
One of the more obvious factors to consider. The farther the delivery location, the greater the charge to cover fuel costs and to compensate delivery staff for their time.
Personal Anecdote: In my early days, I once had to turn down an order at my take-away because the delivery location was so far that the cost would have eliminated any profit. This experience taught me the importance of having a clear and practical policy on delivery distances and charges.
Larger orders often require more staff, more catering equipment, larger vehicles, and more set up time. However, on the plus side they do tend to be more profitable. With this in mind and as an incentive, consider offering a delivery discount for larger orders.
If your delivery fee includes setting up the buffet, providing service ware, and cleaning up afterwards and not just dropping off the food, then these additional services should be factored into the costing of your delivery fee. Customers are typically quite happy to pay more for these added conveniences as long as the value to them is clear from the outset.
Depending on the geographic location, deliveries during peak traffic hours may take longer, costing appreciably more in fuel and labour. Consider implementing surge pricing during these delivery times to account for the extra costs.
Unexpected weather conditions can affect delivery times and costs. You might need to adjust your fees seasonally or have a separate winter surcharge.
Different sized vehicles have distinct operating costs. A large catering van will consume more fuel than a small car. For efficiency, the size of the vehicle needs to match the size of the event.
Your delivery fee should factor in the insurance cost for your vehicles and drivers, as well as clearly define potential liability issues. Vehicle servicing and maintenance costs also need to be included.
I've seen a variety of delivery fee structures in the catering industry. Each has pros and cons; what works best often depends on your business model and your typical customer base:
This simple approach involves charging the same delivery fee regardless of the order size or delivery distance, within a specified radius.
Example: A flat rate of €30 for all deliveries within a 10-mile radius.
This method involves charging a percentage of the total order value for delivery.
Example: 10% of the order total is charged for delivery.
This structure involves tiered pricing based on delivery distance.
Example: €20 for deliveries up to 5 miles, €30 for 5-10 miles, and so on.
This popular approach offers free delivery on orders over a certain amount.
Example: Free delivery on orders over €200.
This structure involves a set base fee plus an additional charge per delivery mile.
Example: €15 base fee plus €1 per mile.
From experience with most of these strategies, the most effective solution often combines several. For example, you might employ a base delivery fee, with additional charges for distance or added services. The key is to find a structure that's fair to both you and your customers, which is easy to understand and implement and fairly represents your local delivery catchment.
When setting delivery fees, I've learned that it's not solely about crunching numbers—it’s about developing a wider strategy that aligns with your overall business goals.
One approach I've found effective is incorporating delivery fees into your overall pricing strategy. Rather than treating delivery as a separate cost, you can build it into the price of each menu item.
Implementation Tip: Be transparent about this approach if customers ask. Customers need to understand early on why prices may appear higher than competitors. You could say something like, “We’ve built the cost of delivery into our menu prices to keep things simple for our customers.”
Another strategy is to use delivery fees as a marketing tool. This can be particularly effective for catering businesses targeting corporate clients, who often have larger orders and appreciate the perceived value of free delivery.
Examples:
Case Study: One of our catering equipment clients, a Dublin-based caterer, implemented a “Free Delivery Fridays” promotion. They offered free delivery on all orders placed for Friday delivery, regardless of size or distance (within their usual delivery radius). This resulted in a 30% increase in Friday orders and also attracted several new corporate clients who became regular customers.
A tiered structure can help you balance the need to cover costs with the desire to encourage larger orders.
Example Tier Structure:
This structure incentivises customers to place larger orders to reduce or eliminate their delivery fee.
For customers who order frequently, consider offering a subscription-based delivery model.
How it works: Customers pay a set fee (e.g. €50 per month) for unlimited free deliveries.
Real-world Example: A catering company in Cork implemented this model for their corporate clients. They offered a monthly subscription of €100 for unlimited free deliveries. This resulted in a 40% increase in order frequency from subscribed clients and a 25% increase in average order value.
Consider implementing dynamic pricing for your delivery fees, similar to how ride-sharing services operate.
Factors that could influence dynamic pricing:
Implementation Tip: Be transparent about your dynamic pricing model. Explain to customers why prices may fluctuate and how they can get the best deals.
Remember, whatever strategy you choose, clear and upfront communication is key. Ensure your delivery fee structure is easy to understand and well communicated to your customers. Be prepared to explain your fees if asked—most customers appreciate honesty and are willing to pay for good service if they understand what they're paying for.
Marketing your delivery fee effectively can make a big difference in how customers perceive it. I've found that transparency and clear communication are key.
If you can offer free delivery under certain conditions, make this a prominent part of your marketing. Free delivery on orders over €200 can be a powerful selling point, especially for potential customers comparing multiple catering options.
Implementation Tips:
When you charge for delivery, be upfront about it. Communicate your delivery fees on your website, in your marketing materials, and when discussing orders with clients.
Example: One high-end catering company I worked for in Galway includes a clear breakdown of their delivery fees on their website. They explain how distance, order size, and additional services affect the fee. This transparency has led to an increase in customer satisfaction scores, as clients appreciate knowing exactly what they're paying for.
Frame your delivery fee in terms of its value to the customer. Highlight the convenience, reliability, and professionalism of your delivery service.
Marketing Message Example: Our delivery fee ensures your order arrives on time, at the perfect temperature, set up and ready to enjoy. It's not just delivery—it's peace of mind.
Consider incorporating delivery fees into your loyalty program. This can help build customer loyalty and encourage larger or more frequent orders.
Examples:
Case Study: A Dublin-based catering company implemented a loyalty program where customers earned one point for every euro spent. When a customer reaches 500 points, they receive free delivery on their next order. This created a 20% increase in repeat business and a 15% increase in average order value as customers strived to reach the point threshold.
Help customers understand why delivery fees are necessary. You could create a blog post or infographic explaining the costs of catering delivery, including fuel, labour, vehicle maintenance, and insurance.
Real-world Example: A catering colleague created a short video titled “From Our Kitchen to Your Event: The Journey of Your Catered Meal.” The video demonstrated the delivery process, from food preparation to final setup. This behind-the-scenes look helped customers appreciate the value of the delivery service, resulting in fewer complaints about delivery fees.
Use delivery fee promotions strategically to attract new customers or boost sales during slow periods.
Examples:
Implementation Tip: Always clearly state the terms and duration of any promotions to avoid misunderstandings.
If you've invested in eco-friendly delivery methods (like electric vehicles or minimal packaging), highlight this in your marketing. Many customers are willing to pay a premium for sustainable options.
Marketing Message Example: Our €5 green delivery fee supports our use of electric vehicles and eco-friendly packaging, helping us reduce our carbon footprint while serving you.
Remember, effective marketing of your delivery fee is more than just justifying the cost—it’s about demonstrating the value you provide to your customers. By being transparent, emphasising value, and strategically using promotions, you can turn your delivery fee from a potential objection into a selling point for your catering service.
In my years of experience in the catering industry, I've seen how the right tools can make a huge difference in managing delivery fees effectively. This importance is reflected in the numerous software solutions which are designed specifically for this purpose.
When looking for delivery management software, key features include route optimisation, real-time tracking, and integration with your in-house ordering system. When combined, these features can help you calculate accurate delivery fees based on distance and time while also improving the efficiency of your delivery operations.
Popular Options:
Case Study: I worked with a caterer, a medium-sized catering company in Cork, who implemented Onfleet for their delivery management. Within three months, they saw a 25% reduction in delivery times and a 15% decrease in fuel costs due to more efficient route planning. This allowed them to offer more competitive delivery fees while maintaining profitability.
Many modern POS systems have built-in features for managing deliveries and calculating fees.
Popular Options:
Implementation Tip: When choosing a POS system, consider how well it integrates with your existing tools and workflows. The best system is one that streamlines your operations rather than complicating them.
Efficient route planning can significantly reduce delivery costs, allowing you to offer more competitive delivery fees.
Popular Options:
Real-world Example: A Dublin-based catering company implemented Route4Me and saw a 30% reduction in fuel costs and a 20% increase in the number of deliveries they could make daily. This allowed them to reduce their delivery fees, making them more competitive in the market.
An effective CRM system can help you manage customer data, track ordering patterns, and implement loyalty programs that can offset delivery fees.
Popular Options:
Navigating delivery fees in catering requires careful consideration of both your business's financial needs and your customers' expectations. By understanding the true cost of delivery, setting fair pricing structure, and clear and upfront communication with customers, you can ensure that your fees support your business without sacrificing customer satisfaction.
Remember, the key is to strike the right balance—your delivery charges should reflect your business value, not just your costs.
If you're ready to start fine-tuning your delivery strategy, now’s the perfect time to put these tips into action. Don't hesitate to adjust and experiment, keeping an eye on how your customers respond.
Ciaran Kilbride is the CEO and Founder of Caterboss, Ireland's leading supplier of catering equipment. With years of experience in the food and hospitality industry, Ciaran established Caterboss in 2017 to provide high-quality, reliable equipment tailored to the needs of professional caterers. His commitment to innovation and customer service has helped Caterboss grow into a trusted name, known for anticipating industry trends and consistently meeting the needs of its clients.
