How Delivery Apps Are Squeezing Local Restaurant Profit Margins

On Tuesday, I let a small cat out of the bag. Most of you know me as a real estate developer, but I also happen to own a restaurant — The Chicken Shack — and I founded a local delivery service called Tri City Food Force back in 2020 to help our local spots survive the national delivery apps.

A bunch of you wrote back asking the obvious question: okay, but what’s actually wrong with DoorDash?

Fair question. So before I get back to real estate next week, indulge me one more food letter — because the answer matters whether you own a restaurant or just love eating at one. And honestly, the lessons here are the same lessons that show up in every industry, the second a national middleman parks itself between a local owner and their customer. Sound familiar?

Here’s the part nobody on a delivery app’s marketing team wants you to know.

No restaurant makes 30% profit. Not the one on the corner. Not the one with the line out the door. Not the one your favorite food influencer raves about. A healthy, well-run, full-service restaurant runs on a 5–10% net margin in a good year. A great year, maybe 12%.

So when DoorDash, Uber Eats, or Grubhub take 30% off the top of a ticket — what exactly do you think happens to that restaurant?

The math nobody wants to do out loud:

A $40 order on a third-party app. The platform takes $12. Food cost on that ticket runs about $13. Labor and packaging, another $10. The restaurant’s “win” is $5 — before rent, utilities, insurance, or the loan payment on the hood vent. Take one bad ticket, one comped order, one driver who delivered cold food and got a refund pulled back from the restaurant — and that order just cost them money.

Here’s the part that gets me. Most owners know this. They can feel it. The deposits don’t match the noise. The kitchen is slammed every night and the bank account is flat.

But the volume has them fooled. Or more honestly — the volume has them scared.

Because pulling off a third-party app feels like turning off a faucet. You watch tickets stop printing. You picture customers forgetting you exist. You imagine the empty dining room on a Tuesday, and you panic. So you stay. You tell yourself the exposure is worth it. You tell yourself you’ll figure it out next quarter. And every Friday night, a piece of your business walks out the back door wearing a national logo on its jacket.

That’s not a business model. That’s a hostage situation with extra steps.

And it’s not just the fees. It’s the customer data the restaurant never sees. It’s the menu prices the platform quietly inflates so the diner blames the restaurant. It’s the bad review for a cold burger that got cold in someone else’s car. It’s a national company sitting between a local owner and the neighbor who lives four blocks away, charging both of them for the privilege.

So what do we do about it?

We educate ourselves first. The next time you order delivery, just remember: that $40 dinner is paying a Silicon Valley tip jar more than it’s paying the people who cooked your food. If that bothers you a little, good. It should.

A small note, since I’m in this fight personally —

Tri City Food Force exists for exactly this reason. Our fees are about a third of what the national services charge. The dollars stay here. The drivers live here. The restaurants are owned by your neighbors.

If you’d rather order through us next time, we’d love that. And if there’s a local spot you wish was on TC Food Force and isn’t yet — reply and tell me. I’ll personally go knock on their door.

Mostly though, this letter isn’t a sales pitch. It’s a heads-up. The restaurants you love are running thinner margins than you think, on a model that was never designed to leave them anything. Knowing that changes how you order. And how you order changes whether they’re still here next year.

Eat local. Tip the cook. Cut out the middleman when you can.