How food delivery makes money: commission, fees and ads

A food delivery platform sits between a customer, a restaurant and a delivery partner. When a customer orders a ₹500 meal, the platform collects the money, keeps part of it and pays the rest to the restaurant. It also pays the delivery partner for the trip. Everything left after those costs is the platform's earnings from that order.

The business looks like a simple marketplace, but the mix of fees is what separates a profitable platform from one that burns money. This guide walks through each layer and the terms that appear in company results.

The first layer is the restaurant commission, a percentage of the food bill that the restaurant pays for orders and logistics. Platforms publish a range of commissions depending on the contract, and the rate varies by city, plan and restaurant size, so no single figure applies to everyone.

The second is the delivery fee charged to the customer, which may be waived for members. The third is the platform fee, a small flat charge per order added in recent years. The fourth is advertising, where restaurants pay to appear higher in search or on the home screen. Ads cost almost nothing for the platform to serve, which is why they are valued by investors.

• Commission: a share of the food value paid by the restaurant.
• Delivery fee: paid by the customer, often reduced for subscribers.
• Platform fee: a flat per-order charge to the customer.
• Advertising: paid visibility sold to restaurants and brands.

Gross order value (GOV) is the total value of all orders placed on the platform, including food, taxes, fees and often before discounts. It is not the platform's income, because most of it passes to restaurants and delivery partners. Companies also report net order value, which usually removes some items such as taxes or delivery fees.

Revenue is what the platform itself records as income. For a food delivery marketplace, that is typically the commission, the fees and the advertising income, not the whole value of the meal. A platform can have a very large GOV and a small revenue figure. Comparing the two as a percentage gives the take rate, the share of order value the company keeps.

Contribution is revenue from an order minus the variable costs of that order: delivery partner payout, customer discounts, payment charges and support. A positive contribution means each order adds money before fixed costs such as technology, salaries and marketing. Investors watch contribution as a share of GOV, because it shows whether growing volume makes the company stronger.

Delivery cost is the largest swing factor. Dense areas with many orders per rider lower the cost per trip, while sparse areas raise it. Discounts funded by the platform reduce contribution directly.

Under Ind AS 115, the Indian accounting standard for revenue, a company must decide whether it acts as a principal or an agent. An agent records only its fee as revenue. A principal records the full value of the goods sold. A change in how a business is structured can therefore change reported revenue overnight without any change in customer demand.

This has appeared in the sector. Eternal, the listed parent of Zomato and Blinkit, reported that Blinkit's revenue included the full value of goods sold from the first quarter of FY26, rather than only the commission, after the business changed how it sells. Companies also publish an adjusted revenue figure that adds back delivery charges and platform fees not included in reported revenue. When reading results, check which basis a figure uses before comparing years.

Under section 9(5) of the Central GST Act 2017, e-commerce operators have been responsible for paying GST on restaurant services supplied through their platforms since 1 January 2022, according to commonly cited summaries of the rule. This brought some restaurants that were outside GST into the tax net through the platform, and it affects how the order value is split. Rates and rules can change, so check the latest GST notifications.

Delivery partners are usually paid per trip, with extra pay for distance, waiting time or peak hours. Platforms generally treat them as independent partners rather than employees, which keeps costs variable but has drawn attention from regulators and unions. The Code on Social Security, which covers gig and platform workers, is a development to follow, and the details of how it applies change over time, so check the latest notifications.

For the company, the rider payout is the biggest single cost of an order. Anything that raises the number of orders a rider can complete in an hour, such as batching two orders in one trip or placing riders near restaurant clusters, lifts contribution without raising the customer's price.

Food delivery moves cooked meals with a cooking time and a more variable cost per order. Quick commerce moves groceries from small warehouses called dark stores, and the platform often earns on margins plus ads. Companies use food delivery's customer base, rider network and brand to enter quick commerce, which is why the two businesses are discussed together in results.

A commission paid by the restaurant has a ceiling, because restaurants push back when it grows and some move to their own ordering channels. A fee paid by the customer can be raised in small steps. That is why delivery charges, small-order fees, surge charges and the flat platform fee have appeared over the years. Each one adds a few rupees per order, and across crores of orders that becomes a large sum.

The risk is customer pushback. If the total bill rises too far, customers order less often or switch to another app, and the platform has to pay discounts to win them back, which cancels the gain. Subscriptions, such as a membership that removes the delivery fee, are one way platforms keep frequent customers while collecting a regular payment up front.

Check whether the headline figure is GOV, net order value, reported revenue or adjusted revenue. Check whether profit is before or after one-time items. Look at the trend in contribution as a share of GOV and in ad revenue. This page explains a business model and is not investment, legal or tax advice, so confirm any rule with a professional.