During the pandemic, third-party delivery became a booming business for restaurant group Big Red F.
On certain nights at some of the Boulder, Colorado, operator’s 12 restaurants, orders from DoorDash, Uber Eats and Grubhub accounted for as much as 40% of sales.
“Who knew that fried chicken and cold beer was going to be so popular delivered to your door during COVID?” owner Dave Query said.
Even after pandemic restrictions ended and dine-in returned, delivery continued to take off for Big Red F. So at the beginning of last year, the company decided to throw some fuel on the fire. It started investing in advertising on the apps to supercharge sales. The apps agreed to match whatever Big Red F spent. “We looked at it as a real way to grow revenue,” Query said.
The plan worked: Big Red F’s delivery sales blew up. But as the company began looking more closely at the numbers, it realized that as third-party delivery grew, its profit margins shrunk.
“It just turned into bad revenue,” Query said. “The margins are really shitty. The amount of money that the guest is paying, the amount of money that the restaurant is paying, it’s not doable.”
So in September, Big Red F did an about-face. It took its restaurants off the delivery apps altogether. Now customers who want their fried chicken delivered have to order it directly from the restaurant’s website. Behind the scenes, the third-party services still handle the fulfillment of those orders, but they are no longer driving business to Big Red F through their marketplaces.
Big Red F was one of the first restaurant operators in Colorado to sign up with DoorDash back in 2017 and went on to partner with all of the other delivery apps. Now, it is one of many restaurants that are pumping the brakes on their use of those services.
More than half (53%) of operators said they are trying to reduce their reliance on third-party delivery, according to a newly published Market Leader report from Restaurant Business and Nation’s Restaurant News. The report surveyed nearly 450 operators from across segments, including independents.
It comes as consumer demand for delivery continues to grow rapidly. Through the first three quarters of 2025, customers spent more than $72 billion on DoorDash, an increase of 23% over the prior year. Uber Eats processed more than $65 billion in orders during that time, a 20% jump from the year before.
Restaurants are seeing the same thing. A third of respondents in the Market Leader report said third-party delivery was their fastest-growing off-premise channel last year, the most of any ordering method.
And even though some operators are resisting third-party delivery, both DoorDash and Uber Eats said their overall restaurant population is growing.
“DoorDash has seen strong growth in the number of merchants choosing to partner with DoorDash,” a spokesperson said.
Restaurants and delivery apps have had an uneasy relationship ever since their whirlwind marriage in 2020. During the early part of the pandemic, delivery was one of the few ways restaurants could get orders. But even today, with restaurants operating more or less as usual, the apps offer two things most operators don’t have: a large audience of hungry customers and a fleet of gig workers who can bring them their food on-demand.
Those services come at a steep price. Restaurants pay anywhere from 10% to 30% of each order to the apps in the form of a commission. That covers the delivery service itself as well as a listing in the marketplace. But it doesn’t account for additional marketing and advertising that delivery apps are increasingly pushing for.
Restaurants have a host of other issues with third-party delivery, such as a lack of access to customer data and the question of who takes the blame when an order goes awry. But their primary concern is still the cost.
Delivery apps have taken steps to address those concerns, switching from a single commission rate to a tiered model. Rates usually start at 15% for basic services like delivery and a marketplace listing, and scale up to 30%, which comes with better visibility on the apps and access to heavy users.
Despite those efforts, 50% of operators said third-party fees remain the biggest challenge to growing their off-premise business, according to the Market Leader report. It was by far the most common answer, followed by order accuracy (33%) and speed of service (24%).
Restaurants’ angst over delivery costs has intensified in recent years as other major costs, like food, labor and rent, have risen significantly. Operators are now more focused on the bottom line, and they are looking for ways to save.
At three-unit Partners Coffee in New York City, inflation has forced it to reconsider even the smallest of expenses, like stickers for its to-go bags and disposable cups for in-store customers.
“And then we look at a delivery app that’s taking double digits in commissions, and that’s one of the first things that we were like, we have to figure out a way to try and cut back on this,” said Andrew Costaris, Partners’ VP of digital.
Partners has offered third-party delivery since 2021, and today those orders make up about 10% to 15% of its cafe sales. (It also sells its coffee in retail stores and online.) It is not planning to leave the delivery apps, because they help it attract new customers. But it would like to rely on them less.
That’s one reason Partners decided to launch its own mobile app. It hopes the app will turn some of its third-party delivery customers into first-party pickup users.
“For us, it’s like, how can we encourage customers that maybe live two blocks away to not get delivery and instead just come in the store and pick it up?” Costaris said.
Partners is among the 38% of restaurants that are investing in mobile apps as a way to reduce their dependence on third-party delivery, according to the Market Leader report. Other tactics include linking loyalty rewards to direct orders (59%), exclusive offers for direct orders (51%), and advertising direct channels on packaging for third-party orders (51%).
Partners is using that last strategy, too, with plans to reprint to-go bags with a message promoting its own app. But Costaris said those efforts can only go so far.
“Those delivery customers are delivery-first customers,” he said. “Eighty percent of them are going to order for delivery regardless of whatever you do to tempt them to come into the store.”
Indeed, while some restaurants are trying to get away from third-party delivery, others feel they have no choice but to lean into it.
Last December, Stella Dennig and her husband, Finn Stern, closed their restaurant, Daytrip, in Oakland. The upscale, full-service restaurant was widely acclaimed. Stern was a semifinalist for a James Beard award. But the couple couldn’t get the business to work financially.
Consumers, Dennig said, are spending less, drinking less, and going out to eat less. They’re also ordering a lot more takeout and delivery, which Daytrip did not offer.
“It felt like running a business in this time is not feasible if we can’t do [delivery],” she said. “Or it’s much, much, much harder.”
So Dennig and Stern pivoted to a new concept, a fast casual in the same location called Daytrip Counter. Unlike its predecessor, the new restaurant is heavily focused on to-go: Delivery and takeout account for half of its sales, and that has pushed closer to 60% more recently.
Dennig said it’s a more tenable model. But it’s also a bit of a Catch-22: Daytrip Counter needs the delivery apps to survive, even as they take a massive bite out of its profits.
The economics of delivery are particularly hard for independent restaurants because they don’t have the scale to negotiate lower rates with their providers, Dennig said. And paying anything less than the full 30% commission will not generate the volume needed to justify the costs.
“It only works if you can reach a certain level of volume,” she said, “and that’s a really hard number to reach.”
Daytrip Counter tried to convert customers to its first-party channels by putting cards in to-go bags. But it stopped when it ran out of cards. It’s currently in discussions with DoorDash about investing in advertising on the app, with a suggested budget of $637 a week—a big number for a small restaurant, Dennig said.
“It’s a bleak landscape,” she said. “But at the same time, this is the only tool we have as a small independent restaurant to make it work.”
Dennig is a board member of the Independent Restaurant Coalition, and said the group has been advocating for federal legislation that would limit how much delivery apps can charge small restaurants. She also expressed hope that in the future, independent restaurants can band together to create their own delivery networks.
“I think that there is power in numbers and there’s a path where that could be possible, and I’d love to see that future evolve,” she said.
As for Big Red F, since ditching third-party delivery, its total revenue has gone down, but its margins are up, a trade-off Query is comfortable with.
And it is working on rebuilding its to-go business, using email, text and in-store marketing to let customers know about the change. After falling to 10% of total sales, delivery is back up in the high teens. Query thinks it could return to prior levels by summertime.
The restaurateur and trained chef is not anti-delivery. He uses the apps himself, and marvels at what he’s willing to spend for the convenience.
“It’s a brilliant idea,” he said. “It worked for us for a long time, until it didn’t.
“For those who think they can afford to make the choice to not do it, go for it. It just was something we could not afford to continue to do.”
