Gross vs Net: How Delivery Fees Distort Your P&L (and Your Prime Cost)

Third-party delivery didn’t just change how food leaves your kitchen. It changed how your numbers lie to you.

DoorDash, Grubhub, Uber Eats, and similar platforms promise “more sales.” And sure — orders come in and your top line can look bigger.

But bigger is not the same as better.

If delivery fees are recorded the wrong way, your Profit & Loss statement — and more importantly your prime cost — stops telling the truth. And when the math lies, operators make decisions based on fiction.

Gross Sales vs Net Sales: What’s Actually Happening

Most delivery platforms report gross sales (what the guest paid).
Restaurants, however, only receive net sales after:

Commissions
Marketing fees
Processing fees
and other platform charges

Example:
Customer pays: $100
Delivery platform keeps: $33
Restaurant receives: $67

That $33 never hits your bank account — but many P&Ls still show the full $100 as revenue.

That’s where the distortion starts.

How the Same Order Tells Two Different Stories

Let’s look at the exact same order recorded two different ways.

Assumptions:

Customer pays $100 via a delivery platform
Platform fees total $33
Food cost is $30
Labor cost is $25

Comparison Table:

	Gross Sales Method	Net Sales Method
Reported Sales	$100	$67
Delivery Platform Fees	$33 (expense)	$0
Food Cost	$30	$30
Labor Cost	$25	$25
Prime Cost (Food + Labor)	$55	$55
Prime Cost %	55%	82%

Nothing operational changed:

same food
same labor
same order

But the story your P&L tells is completely different — because the denominator changes.

Under the gross method, delivery can make your restaurant look inefficient. Under the net method, delivery often reveals itself as what it is: a high-cost channel that needs different pricing and strategy to work.

Why Prime Cost Takes the Biggest Hit

Prime cost is usually calculated as (food + labor) ÷ sales.

So when delivery sales are overstated (gross), your prime cost percentage can look “better” than delivery really is — or your overall prime cost can look “worse” than your operation actually is — depending on how fees get categorized.

Either way, the KPIs stop being useful. And when KPIs stop being useful, decisions get weird:

cutting labor when labor wasn’t the issue
changing vendors when food cost wasn’t the issue
raising prices without understanding the channel economics

Why This Approach is Controversial (and Why It’s Still Useful)

Some people push back on netting delivery fees against sales.
That’s normal.

“But the customer paid $100”

True — the guest paid $100.

But management reporting isn’t about what flowed through someone else’s hands. It’s about what your business actually earned and controlled.

If you never had access to that $33 and never had the option to keep it, calling it “your revenue” can be misleading for decision-making.

Traditional P&Ls Weren’t Built for Third-Party Delivery

Classic restaurant accounting assumes:

you control pricing
you own the customer relationship
fees are small (like credit card processing)

Third-party delivery breaks all three assumptions. Platforms act less like processors and more like resellers with a toll booth.

Net Sales Forces an Uncomfortable Truth

Netting delivery fees against sales often makes delivery look less attractive — because it reveals the true economics.

That discomfort isn’t a flaw. It’s the point.

Tax Reporting vs Management Reporting

Important note: this isn’t about “doing taxes wrong.”

Many restaurants keep one presentation for compliance/taxes and also keep an internal management view that’s clearer:

net sales by channel
prime cost by channel

Same data. Better decisions.

Want to see how your delivery numbers really stack up? Let’s talk about how Bookkeeping Solutions can help you get a clearer, more actionable P&L — and make decisions based on reality, not fiction. Contact us.

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