Free delivery threshold: how to set it by contribution

A free-delivery threshold costs the restaurant money before guests have reacted to it: everyone who already ordered that much stops paying the fee. In the hypothetical restaurant below, setting the threshold at $35 cuts those orders’ monthly contribution by $630.50. Added items and truly additional orders must cover that loss. An order is additional only if it would not have happened without the new terms.

Compare settings by monthly contribution for the delivery area: item revenue plus delivery fees, less variable costs. Average order value is the wrong yardstick here: it can rise even when the threshold lowers contribution. This is a hypothetical model of one restaurant delivery area in the United States. All amounts are in US dollars.

Model assumptions

In the Eatery Club™ admin panel, each delivery area has its own terms in a row of the «Радіуси доставки» (delivery areas) block. In the model, an outside delivery service makes the deliveries and the period is one month.

• The starting terms are a $5 delivery fee on every order, no free delivery, and a $15 minimum order. If you already offer free delivery above a threshold, use last month under those terms as your baseline. With no guest reaction, contribution changes only for orders whose fee changes. Include all guests when estimating reactions, including those who previously added items to reach the old threshold.
• The restaurant pays $8 for each trip within the area, regardless of order value. There are no distance surcharges or volume discounts. Additional trips use the same rate and require no new fixed costs.
• Food cost is 30% of the item subtotal. Prices and the food-cost percentage stay the same in both months, including for added items.
• Packaging costs $1 per order for both delivery and pickup. Added items do not increase packaging cost, and a top-up does not reduce the guest’s subsequent orders.
• Every order, pickup included, is paid online at the same prices. The card fee is 3% of the full payment, including the delivery fee.
• The model excludes sales tax, promo codes, loyalty points, tips, cancellations, and gross receipts taxes. If you collect sales tax, exclude it from revenue, use the costs you actually pay, and calculate card fees on the guest’s full payment, including tax. Apply any gross receipts tax to its actual taxable base.
• Each threshold and discount level includes the stated amount: an order exactly at that amount qualifies.
• In the baseline month, each guest places one order except in scenario f, where two orders become one. Reactions to the new terms occur in the first month.
• Seasonality, advertising, guest churn, and new guests who would have arrived anyway are unchanged between months.

Order contribution = items + delivery fee − food cost − packaging − card fee − courier

Keep the guest’s delivery fee separate from the trip cost. If the delivery service collects payment, check the contract: who owns the fee, whether it offsets the trip charge, and which commissions are withheld from which amounts.

• If the restaurant owns the fee and the service applies it to the trip charge, record the full fee as revenue and the full trip charge as a cost.
• If the service owns the fee and it covers part of the trip charge, enter 0 for fee revenue and only the restaurant’s remaining payment for courier cost.
• If the service keeps the fee and invoices the trip separately, enter 0 for fee revenue and the full invoice for courier cost.

Count each commission once. Do not add a withheld fee to costs a second time. In this model, the restaurant owns the $5 fee and pays $8 per trip. For in-house couriers on a fixed wage, count only the costs a new trip adds.

Here is the same $40 order before and after introducing a $35 threshold:

Order of $40	Before	After
Items	$40.00	$40.00
Delivery fee	$5.00	$0.00
Food cost, 30%	−$12.00	−$12.00
Packaging	−$1.00	−$1.00
Card fee, 3%	−$1.35	−$1.20
Courier	−$8.00	−$8.00
Contribution	$22.65	$17.80

The trip cost does not change: this order was already being delivered. Removing the $5 fee also removes its $0.15 card fee, leaving a $4.85 decrease in contribution.

Order scenarios

Compare the month before the change with the month after in the same area. For combined orders, compare the replacement order with the group it replaces; for lost orders, count the contribution that disappears. The model assigns every order to exactly one scenario. That is an assumption: the restaurant’s data does not show this split directly.

Scenario	What changed	Change in one order’s contribution	Where to look for candidates in your data
a. Already at or above the threshold	Same order, no fee anymore, the courier was making the trip anyway	minus the delivery fee net of the card fee on it	Last month’s orders at or above the threshold. If these guests keep ordering as before, this is the only scenario you can calculate before the change
b. Topped up to the threshold	The guest added items and got free delivery	contribution of the added items minus the delivery fee net of the card fee on it	Guests whose orders used to be below the threshold and are now at or above it
c. Truly additional	An order that would not exist without the threshold: a new guest or more frequent orders	the order’s whole contribution, with the courier already subtracted; at or above the threshold it carries no fee	A single order does not show this
d. Switched from pickup	Same order, now delivered with no fee	minus the courier	Guests who used to pick up their orders and now order delivery
e. Below the threshold, unchanged	Nothing	0	Orders below the threshold in both months
f. Combined orders	Several orders with a fee became one order at or above the threshold	contribution of the combined order minus the contributions of the orders it replaced: no fee, and one trip and one packaging instead of several	Guests who now have fewer orders but a larger amount per order
g. Lost because of the new terms	The guest no longer orders delivery in this area	minus the order’s whole contribution	Last month’s orders below the new minimum, if the minimum is raised, and guests who stopped ordering

Guest histories can identify possible cases of b, d, and f, but they do not prove the threshold caused the change. For f, they also do not identify which earlier orders a combined order replaced. Matching two old orders to one new order is an assumption here. Estimate the share attributable to the new terms in b, c, d, f, and g by comparing changes with a similar area whose terms stayed unchanged over the same weeks. Alternatively, state that share as an assumption, as this model does.

An order that switches from another channel is not a truly additional order in scenario c. Calculate its effect as:

Change in contribution = the order’s contribution with delivery − the same order’s contribution in its previous channel

Pickup switches fall under scenario d. If the order used to come through an aggregator, subtract the aggregator’s commission under your contract from the previous contribution; if it was a dine-in order, subtract the dining room’s variable costs.

Calculating the $35 threshold

The area’s delivery orders in the baseline month were:

Item subtotal	Orders	Delivery fee	Contribution per order
$18.00	150	$5.00	$7.91
$26.00	200	$5.00	$13.27
$32.00	120	$5.00	$17.29
$40.00	90	$5.00	$22.65
$58.00	40	$5.00	$34.71
Total	600

The model also assigns to this area guests who picked up 20 orders of $38.00, each contributing $24.46. All candidates use this same baseline: 620 orders and $9,831.40 in contribution.

At a $35 threshold, assume 50 guests add $5 to a $32 order and 20 add $11 to a $26 order. All 20 pickup guests switch to delivery. Another 15 guests combine two $18 orders into one. There are 20 truly additional orders of $37. The model assumes no orders are lost here. An unchanged minimum and an unchanged fee below the threshold do not guarantee that orders will be retained.

Scenario	Orders	Item subtotal, $	Change per order	Change for the month
a	90	40	−$4.85	−$436.50
a	40	58	−$4.85	−$194.00
b, topped up by $5	50	32 → 37	−$1.50	−$75.00
b, topped up by $11	20	26 → 37	+$2.52	+$50.40
c	20	37	+$15.79	+$315.80
d	20	38, pickup → delivery	−$8.00	−$160.00
e	370	18 (120), 26 (180), 32 (70), unchanged	$0.00	$0.00
f	30 → 15	2 × 18 → 36	−$0.70 per guest	−$10.50
g	0			$0.00
Total				−$509.80

Monthly contribution falls from $9,831.40 to $9,321.60. Average delivery order value, using item revenue only, rises from $29.43 to $31.41 (+6.71%). Here is the same result broken down by revenue and cost:

Line	Change for the month
Items minus food cost and the card fee on them	+$810.70
Delivery fee minus the card fee on it: 370 orders pay it instead of 600	−$1,115.50
Courier: 625 trips instead of 600	−$200.00
Packaging: 625 orders instead of 620	−$5.00
Total	−$509.80

Lost delivery fees are the largest negative line. Trips increase by 25: 20 for additional orders plus 20 for former pickup orders, less 15 saved by combining orders.

You can estimate the loss on unchanged orders before launch. Last month, 130 orders reached $35. If their contents stay the same, waiving the fee costs 130 × $4.85 = $630.50 in monthly contribution.

Without scenario c, the combined result is −$825.60. A truly additional $37 order contributes $15.79. With the other reactions as assumed, breaking even requires 825.60 / 15.79 = 52.29: at least 53 orders a month, or 8.83% of the baseline 600 deliveries. The model supplies only 20, so the $35 threshold reduces contribution by $509.80.

Added items do not always cover a waived fee. Each added dollar leaves $0.67 after food cost and card fees. Recovering the lost $4.85 requires at least $7.24 in added items. That explains the split in scenario b: adding $5 reduces contribution, while adding $11 increases it.

Comparing three thresholds and a two-level discount on the same baseline

Apply other settings to the same 620 baseline orders. Each candidate has its own assumed reactions because guests need to add different amounts to qualify. None of the four candidates includes lost orders. For each, the additional order value is set slightly above the relevant threshold or discount level.

• At $30, 250 existing orders already qualify. Of the 200 guests ordering $26, 80 add $7 each. All 20 pickup guests switch to delivery, and 15 guests combine two $18 orders.
• At $35, use the reactions from the detailed calculation above.
• At $45, 40 orders already qualify. Of the 90 guests ordering $40, 30 add $7 each; of the 120 ordering $32, 10 add $15 each. Pickup guests do not top up to $45. Another 5 guests combine two $26 orders.
• For two levels in one area row, delivery costs $3 from $30, a 40% discount, and becomes free from $45. The same guests add items as under the separate $30 and $45 thresholds. At a $3 delivery fee, 10 pickup guests switch to delivery, and 15 guests combine two $18 orders.

	$30	$35	$45	Two levels
Guests behave as before	−$1,212.50	−$630.50	−$194.00	−$601.40
Topped up	−$12.80	−$24.60	+$47.20	+$344.80
Switched from pickup	−$160.00	−$160.00	$0.00	−$50.90
Combined orders	−$10.50	−$10.50	−$3.50	+$33.15
Total without additional orders	−$1,395.80	−$825.60	−$150.30	−$274.35
One additional order	$32: +$12.44	$37: +$15.79	$47: +$22.49	$35: +$17.36
Additional orders needed per month	113	53	7	16

The first row is the loss if every guest orders exactly as before. The following rows adjust for their reactions. You can calculate that initial loss from your own records before launch: $30 waives the fee on 250 existing orders, while $45 waives it on only 40. A lower threshold relative to existing orders means a larger initial loss.

The remaining rows depend on assumptions. Adding $7 to qualify at $30 reduces contribution by $0.16 per order because the break-even addition is at least $7.24. With two levels, the same addition qualifies for the $3 fee and adds $2.75 in contribution: the restaurant gives up only $2 of the delivery fee.

Combining two $18 orders under the $35 threshold costs $0.70 in contribution. At the $3 fee level, it adds $2.21: there is only one trip, and some fee revenue remains. Assuming the same willingness to reach $45 with two levels is optimistic, since delivery already costs just $3 from $30. If nobody adds enough to reach $45, that candidate needs 23 additional orders rather than 16.

Under these assumptions, $45 needs the fewest additional orders and $30 the most. The model cannot say whether 7 or 113 orders are achievable. Test the terms in one area and compare its contribution change with that of a similar, unchanged area over the same weeks. If more baseline orders are already at $45 or above, the ranking may differ.

Raising the minimum order

A minimum order does not change the fee: it prevents orders below that amount from being placed. Consider raising the minimum from $15 to $20 while retaining the $5 fee on every delivery. This affects 150 orders of $18. Assume guests top up 90 of these orders to the minimum and switch 15 to pickup; the remaining 45 orders disappear. In this example, the area’s minimum applies only to delivery.

Reaction	Orders	Change per order	Change for the month
Topped up to $20	90	+$1.34	+$120.60
Switched to pickup	15	+$3.15	+$47.25
Lost, scenario g	45	−$7.91	−$355.95
Total	150		−$188.10

Adding items to reach the minimum leaves the delivery fee intact. The added item revenue, less food cost and card fees, increases contribution. Switching to pickup adds $3.15 because the trip costs more than the $5 fee. Each lost order removes $7.91. If 15 orders switch to pickup and every other retained order reaches $20, the minimum pays off only if no more than 24 of the 150 orders are lost.

In this model, a delivery order breaks even at an item subtotal of about $6.19 and contributes a positive amount from $6.20:

Break-even subtotal = (trip + packaging − fee net of the card fee) / the share left from each dollar of items

The existing $15 minimum is well above that point. A minimum raises contribution whatever the guests do only when the orders below it are loss-making (for example, in a distant area where the trip costs more) and neither those guests’ other orders nor the costs depend on the minimum. Here those orders contribute positively, so the reactions decide the result: how many guests add items and how many stop ordering. The model does not account for kitchen load at peak hours or other reasons to change the minimum.

Settings in Eatery Club

Open the delivery zone card and find the area’s «Радіуси доставки» row. Set «Стандартна ціна доставки» (default delivery fee), «Сума замовлення для безкоштовної доставки» (order amount for free delivery), «Мін. сума замовлення» (minimum order amount), and any discount levels. Each level assigns a delivery discount percentage to an order amount. A zone card can contain several areas; calculate each separately (delivery zones).

Use a test checkout before launch. Check which amount is compared with the threshold and minimum: item subtotal or amount due, before or after a promo code and loyalty-point payment. Check whether an order exactly at the threshold receives free delivery and how the threshold interacts with discount levels. Add items, enter an address in the area, and inspect the delivery charge without placing the order. Repeat for the restaurant card’s «Мінімальна вартість замовлення» (minimum order amount) and «Мінімальна вартість безкоштовної доставки» (minimum amount for free delivery) (restaurant settings).

If you use a POS, match the area row’s «Послуги доставки» (delivery services) field to the POS service. Otherwise, the admin panel and POS will show different delivery charges. «Правила доставки» (delivery rules) is guest-facing text, not a calculation setting (delivery rules). If the text names a threshold or a price, update it together with the area’s terms.

Data for the calculation

Collect the area’s monthly orders with item subtotals, delivery fees, and fulfillment methods. Scenarios b, d, and f also require guest identification. The «Замовлення» (orders) list includes «Клієнт», «Ресторан», «Вартість доставки», «Тип доставки», «Вартість замовлення», and «Сума до сплати»: guest, restaurant, delivery amount, delivery type, item total, and amount due (orders).

Assign a delivery order to its area by address. For a pickup guest, use their delivery address before or after the change, if available. Guests with no deliveries have no known area; count them separately. Start the export in «Замовлення» and retrieve the file from «Налаштування → Експорт» (Settings → Export). Check for addresses and other required fields, and obtain any missing data from the POS (data export).

«Статистика доставки» (delivery statistics) separates delivery and pickup average order values, but an area calculation requires individual orders. Get cash-register and shift reports from the POS system (delivery statistics).

Use the delivery service’s invoices or your own records for trip costs. The «Кур’єри» (couriers) guide covers fields for in-house couriers and assigning them to orders; it does not supply trip rates or actual trip costs (couriers).

Testing the decision

1. Calculate contribution for each of the area’s orders last month. Record delivery fees and trip costs separately.
2. Apply each candidate’s terms to those orders with guest behavior unchanged and calculate the contribution lost.
3. Document assumptions about added items and amounts, pickup switches, combined orders, and lost orders.
4. Calculate how many truly additional orders each candidate needs to pay off.
5. Test the minimum, threshold, and discount levels at checkout.
6. Launch the chosen terms in one area and keep a comparable area unchanged over the same weeks. Compare each area’s contribution change against the month before launch.

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For delivery zone settings, discount levels, and delivery statistics in Eatery Club, see the Help Center’s Delivery section.