Picture this. You roll out of bed on a late Sunday morning with no motivation to cook breakfast, and no desire to head out into the cold to buy some breakfast. You open up your phone, and head to the DoorDash app to order a bagel with cream cheese and a coffee from a local restaurant. But hold on, why do you now have to pay $16 for your $6 order? Why this extreme markup? Let’s find out.   

With a combination of rolling COVID-19 restrictions, as well as the sheer laziness of an average person living in the United States, food delivery apps are becoming increasingly popular every month. In 2020, there was an estimated 38 million food delivery app users in the United, and that number is expected to rise 16%. In some large cities across the country, the impact of shutdowns and restaurant closures led to a 40% increase in food delivery demand. 

The most controversial aspect of the food delivery industry is the surprising markups that customers come across. Markups on these food deliveries range from about 7 percent to 91 percent, depending on the delivery service you order from. If you take a closer look at the cost breakdown, you can see where your money is going. Here are some definitions of some costs you may see associated with your delivery total:

Delivery Fee: A fixed price that you pay so that the food can be delivered. 

Service Fee: A percentage of the cost of your order that is added to your final bill. 

Surge Pricing: When more people are ordering food, your delivery fee may be extra. 

Small Cart Fee: You may be charged more money to make a small order more worth the time for companies. 

Merchant Fee: Is added to your total by restaurants who ask companies to include it to help the gain profits lost from food delivery. 

There really is no way to decide what will be the cheapest food delivery service to use, because different services may charge different prices for food, and may charge different fees for certain restaurants or times during the day. If you’re looking to save some money, you would certainly be better off going to pick up your order instead of paying extra fees that can lead to a bigger loss than you expected.