The True Cost of Food Delivery: Who Pays and Who Profits?

✍️ Opinions

Sanvi Barjatya

12 Jun 2025 — 5 min read

Mandar Lande, Cofounder & CEO of Waayu

This article has been contributed by Mandar Lande, Cofounder & CEO of Waayu.

Food delivery apps are now a standard element of daily life. With a few clicks, a hot meal is delivered to your doorstep with no preparation, no cleanup, just immediate pleasure. What was once a luxury has now become a default choice, in big cities as well as in tier 2 and 3 cities. However, beneath this apparent simplicity lies a complex network of economic trade-offs. The real cost of food delivery isn’t just about service charges and tips; it shows up in shrinking restaurant profits, unstable gig work, and the growing dominance of delivery platforms.

The approach of food delivery platforms seems straightforward: more access for consumers, more reach for restaurants, and flexible incomes for workers. On the surface, consumers seem to be the winners. They receive variety, quickness, and ease of use. However, there are certain drawbacks that customers and restaurants face.

The Subtle Economics of Food Delivery

Although online food delivery platforms provide visibility and volume, the cost usually falls on the small and mid-sized food operations that are just trying to keep their heads above water. There are also some challenges, which includes :

Tight Margins for Restaurants: Delivery platforms take a commission of 25–35% from restaurants, a big slice out of a profit margin. Restaurants also pay for other services such as rank boosts in order to remain seen and competitive on these apps, squeezing their profits even more.
Hidden Costs for Consumers: When all other fees are taken into account, a meal that seems reasonably priced at INR 250 can easily become more than INR 400. These include taxes, platform commissions, delivery fees, and packaging expenses; many of these are not readily apparent until the last payment screen. Customers are frequently caught off guard by this large markup, which causes a discrepancy between perceived and actual value. These unstated expenses have the potential to significantly raise a customer's overall food delivery expenditures over time, making it less cost-effective than it first appears.
Exposure Without Sustainability: Small restaurants can reach a wider audience and gain visibility through platforms like Zomato, but many find it difficult to make ends meet due to the high commissions (up to 30%), required ad spends, and additional delivery costs. After platform deductions, owners frequently receive little to no profit, which eventually makes what initially appears to be growth into an unsustainable business model.
Insecure Gig Work: Despite being essential to the system, delivery workers often receive the least compensation and have minimal protections. With traffic, inclement weather, and late nights, they endure to bring home low, irregular pay and minimal security or benefits. Platforms, on the other hand, are asset-light, taking value from restaurants and riders alike, sustaining a model in which convenience to the customer obscures economic pressure on those really cooking and delivering food.

Who Actually Benefits?

Food delivery platforms in the market like Swiggy and Zomato have transformed the supply and consumption of food by giving consumers historically unprecedented convenience and broadening restaurants' clientele. Behind the ease, however, delivery workers struggle with inconsistent pay and lack of benefits, restaurants must contend with rising costs to remain visible, and customers gradually pay more while becoming disconnected from the local food culture.

While there are common benefits and difficulties, platforms benefit most. They employ asset-light strategies owning neither the kitchens nor the delivery fleets yet maintain control over customer data, visibility, and transactions. However, fixed subscription fees are now provided by some platforms in place of their formerly high commissions, decreasing pressure on restaurants and prices for consumers. Nevertheless, platforms have the most power in general, making money off both parties with minimum risk and maximum control over the ecosystem.

A Better, Fairer Model

Some food tech innovators and restaurant coalitions believe a more equitable system is possible. The key lies in rethinking the role of the platform not as a toll booth, but as a bridge.

Use Flat or Subscription Fees: Replace variable commissions with stable, fair pricing.
Let Restaurants Pay for Services, Not Give Up Revenue: Logistics or order management fees not a percentage per order.
Clear, Reasonable Delivery Fees for Consumers: Make fair pay and local businesses possible without hidden markups.
Build Long-Term Partnerships: Co-marketing, shared growth, and quality standards instead of sales in isolation.

Additionally, in India, food delivery portal staff are the backbone of food delivery websites but get low, irregular wages, no benefits, and no security of employment because they're recognized as independent contractors. While modest accident insurance and hardship grants have been offered by companies like Swiggy and Zomato, most workers continue to pay for things like fuel and maintenance, working long hours to earn a minimum income.

Demands for fair treatment have grown in cities like Bengaluru and Delhi, with calls for increased wages and greater transparency. Internationally, cities like New York and several European countries have begun to introduce minimum wages or redefine gig workers as employees potentially offering blueprints for India to include better, more equitable working conditions without compromising flexibility.

The revolution in food delivery is not by nature flawed. It can be at its best a triumph of convenience, accessibility, and opportunity. But when convenience is made to take priority over fairness and sustainability, industries suffer whether it's the richness of local restaurants, the dignity of the workers, or the quality of the eating experience itself. The task before us is not to tear down the delivery model, but to reimagine it. With improved regulation, moral innovation, and more openness, we can envision a system that rewards all parties in the kitchen and on the bike, and yes, even for the customer in their home. The question is not whether food delivery is here to stay. It's whether we can make it work better for everyone.