How to set takeaway delivery fees and a delivery radius

Delivery is where takeaways quietly lose money: a £12 order three miles away can cost more to deliver than it earns. A few simple rules fix most of it.

Work out what a delivery costs you

Add up what a typical delivery run costs: the driver's pay for the time (there and back), fuel, and wear on the vehicle. For many takeaways it lands somewhere between £3 and £6 a run, rising with distance. Use your own numbers; this is the figure everything else is based on.

Set your radius

• Start with the distance your driver can cover there and back while the food is still hot, usually 15 to 20 minutes' drive.
• Check the roads, not the map: a river or a bypass can make a short distance a long drive.
• You can always extend it later. Shrinking it upsets customers.

Charge by distance

One flat fee overcharges your neighbours and undercharges the far edge. Distance bands are fairer and easy to understand:

• Up to 1 mile: lowest fee, or free
• 1 to 3 miles: standard fee
• 3 miles and over: higher fee and a higher minimum order

Minimum order and free delivery

A minimum order makes sure a delivery is worth the trip. Set it so the profit on a minimum order covers the cost of the run. A free delivery threshold (for example, free over £25) nudges people to add a side or a drink, which usually more than pays for the delivery.

Tell people before they order

Nothing annoys a customer more than finding out at checkout that you don't deliver to them. Ask for the postcode first and show the fee and minimum straight away.

In Direct Dine you set a base postcode, distance bands with their own fee and minimum, and an optional free-delivery threshold. Customers enter their postcode first and see the price before they build an order. See Setting your delivery area.

Review it every few months

Look at where your orders actually come from and how long runs take. If the far band is always late or always small orders, raise its minimum or pull the radius in.