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Food Delivery Apps: Are They Worth the Hit to Your Wallet?

Sep 21, 2020

Food Delivery AppsFood delivery apps can be extremely convenient, especially during the last few months while we’ve all been stuck in quarantine. Despite the many things that make them great, they do come with a handful of fees that standard restaurant delivery and takeout do not. Below, we’ve listed the various fees that accompany your meal so you can decide whether or not delivery by app is worth the extra money for you.

Menu item

The first cost when building an order through a delivery app is the price of the actual food and drink item(s). Although it may seem like this is the one fee that is set in stone, you should do some comparative research prior to ordering by cross-referencing the prices on the app with the restaurant’s official website to make sure no food items are marked up. If the items are marked up, consider skipping the app and ordering directly from the restaurant, but be sure to reach out to the app’s customer service team to alert them of the price discrepancy.

Service fee

The service fee is a fee charged by the delivery company for providing the service. Keep in mind that this money goes to the app to support their behind-the-scenes efforts, not the restaurant or the delivery person. If you’re on the fence between ordering through the delivery app or doing takeout, you may want to go straight to the restaurant, as a local restaurant would not charge a service fee on top of other delivery fees.

Taxes

In addition to other fees, you will be charged a sales tax based on applicable local tax laws. These are pretty standard across all apps, and would be included in the bill even if you ate in the restaurant or if the restaurant delivered directly to you. If the taxes look unusually high, calculate whether or not the taxes were based on just the food items alone, or the entire total (food items plus the other charges). If the entire order total was taxed and not just the food, consider ordering directly from the restaurant to avoid being over-taxed.

Delivery fee

The delivery fee is different from the service fee, as this is the price the restaurant charges for delivering the food to you. This means the money goes to the restaurant, and they’d most likely charge this if they delivered the food directly to you. Many restaurants will typically charge $1-2 if you live within a certain distance and order straight from them, so it may pay off to skip the app. But regardless of whether you’re ordering through the app or through the restaurant, keep in mind that the delivery fee is completely up to the restaurant’s discretion, and they may increase the fee during inclement weather or peak times/days for delivery. If you live within walking distance, consider ordering takeout and walking to pick it up to avoid this extra charge.

Gratuity

This is the optional tip for the delivery driver, so this money goes directly to the person that drops the food off to you. Even though the other fees can add up quite a bit, it’s important that you still tip the driver adequately, as they will not profit off of any other fees. This is especially important if you are ordering during peak times/days for delivery or rush hour traffic. You should also factor in the size of the order when calculating the tip.

Memberships

Most apps now offer monthly or yearly membership programs that grant you free delivery every time you order, so if you don’t want to ditch your apps, consider getting a membership for the one app you use the most. But, be sure to see how much the total cost nets out to each month, and consider whether or not you would order that much in delivery fees prior to purchasing the membership. After the free trial ends or after the first year runs out, reevaluate how useful it is to you and how much money you’ve both saved and spent. From there, you can decide whether or not you want to renew your membership. Ordering food is convenient, but that convenience comes at a cost. If you’re looking to trim your budget so you can save up some extra money, consider cutting food delivery for a few months and see how it goes. Maybe you’ll find some other restaurants close by that are cheap, delicious, and walkable, or maybe you’ll perfect your cooking skills! Either way, you now have some more insights into where your money is going when you place an order, so spend however you see fit, and don’t stress about it too much—everyone craves a little convenience every now and then.

erin_elis

Erin Ellis
Accredited Financial Counselor
Philadelphia Federal Credit Union
eellis@pfcu.com

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