How to Measure Food Delivery Marketing - the 7 Metrics to Track

Food delivery apps are a performance marketing channel for restaurants and cloud kitchens. Understanding and optimizing for key metrics, bidding strategies and knowing what impacts revenue and profit, are essential parts of the modern delivery marketing toolkit.

Delivery apps are data rich environments, and the most successful delivery marketers understand what metrics to track, and the levers to pull to get the desired results for their brands.

Delivery app ad platforms provide access to some data about campaign performance, but in my experience, in practice they often don't provide access to the full range of required performance metrics to properly optimize this type of marketing.

This means restaurants need to either manually calculate important success metrics or use specialized delivery marketing software to do it automatically.

Learn more about boosting delivery app campaign performance >>

In my time working with delivery brands over the past few years I’ve noticed a few trends when it comes to metrics and delivery apps.

1. Those that take decisions based on a set of metrics, rather than just revenue, have better overall performance.
2. There is often some confusion about what each metric tells you about the performance of campaigns.

The root of the issue is that often campaign metrics can be had to find, and secondly many campaigns are run without clear goals in mind.

In this post I’ll go through the most important metrics to track in food delivery marketing, but also why, and in what circumstances, you want to track them.

The funnel framework

Overall it’s best to think about delivery app metrics as a funnel.

Funnels are an extremely common framework in digital marketing and can be easily deployed in the delivery app context to understand performance.

In the delivery app context a typical funnel looks like:

Ad impressions, discount campaigns, organic app discovery > menu views > confirmed order > successfully delivery order > repeat order by same customer.

Inside of this funnel are all our key delivery metrics from awareness, conversion rates to revenue and profit. Crucially however each metric tracks a step of the funnel - and taken together makes up a holistic view of delivery app performance.

Metrics to track for delivery app marketing success

1. Impressions

Impressions are the number of times an ad was served, or shown, to an app user. Impressions are a top of the funnel metrics that indicates how often your ad is being shown and how many people are seeing it.

It’s important to note that impressions do not tell you exactly how many people saw your ad - just how many times it was “served” in the app.

When to use it

Impressions are often not the most important metric in marketing since they don’t give you any indication or how successful your ads were. However there are reasons for tracking impressions particularly when running brand awareness campaigns. Impressions are a key metric to track for this campaign type.

2. Clicks (aka Menu views)

Without users clicking on your listing from either ads or organically you cannot generate orders. In delivery apps, clicks are generally a metric that refers to a user viewing the menu, since when they click they land directly on the menu in the app - and as an operator this is typically what matters.

When to use it

Clicks are another top of funnel metric that gives you a way to track the overall awareness of your brand. If you see clicks trending upwards you know that the amount of people viewing your menu and checking out your brand is going up. Conversely if you see sudden, unexplained drops you know that a lot less people are interacting with your brand.

3. Click Through Rate (CTR):

In delivery apps, Click through rate, or CTR is the number of people who click on an ad and generate a menu view after seeing an ad.

Click through rate is a conversion rate and it calculated with the formula:

(Menu clicks / Impressions) x 100

For example:

If you run a campaign that generated 120,000 impressions and 6000 people clicked the ad and viewed the menu then the CTR would be

(6000 / 120,000) * 100 = 5%

When to use it

Click through rate impacts effectiveness of your advertising. The higher the CTR the more attractive the ad is to the user. In the case of delivery apps this usually relates to targeting.

A high CTR indicates your ads are being shown at times which people are looking to for what you sell and / or your menu offering is attractive in general to the delivery area you are targeting.

If you have a low CTR, this usually means the cost of your campaigns will rise and it's time to look when you are advertising and if your menu offering and app content is appealing in relation to the competition.

4. Conversion rate

Conversion rate, sometimes called CVR or CTO, is the percentage of users who made an order after clicking on the menu.

Conversion rate and it calculated with the formula

(Orders placed / menu clicks) x 100

Conversion rate is one step further down the funnel from click through rate.

When to use it

The conversion rate of your menu into orders is one of the most important metrics in food delivery marketing. This is because it directly impacts organic visibility in the apps, the effectiveness and ROAS of your ad spend and also your overall ability to generate revenue.

In general, those with a higher conversion rate have a more efficient business so they can outspend the competition on marketing, and often drive more growth.

Increasing conversion rate can be a goal of marketing in itself since it has such a wide ranging impact on overall performance.

A few of the main reasons for tracking conversion rate include:

App store visibility: Conversion rate is a main indicator of a healthy store listing and directly impacts organic visibility. If organic orders are dropping then changing in conversion rate is one of the ways you diagnose the reason.

Overall ad costs: Conversion rate directly impacts all your ad performance. A higher conversion rate means more orders and revenue per dollar spent on marketing. This in turn directly impacts ROAS or return on ad spend. Any marketing strategy involving revenue optimization should also be tracking conversion rate as a secondary metric.

What is a healthy menu conversion rate?

A good conversion rate in food delivery is 20%.

5. ROAS or Return On Ad Spend:

ROAS is a multiplier representing the revenue generated by the amount spent and is one of the most common metrics associated with delivery app performance marketing.

The ROAS formula is

ROAS = (Revenue from advertising / Cost of advertising) × 100

ROAS is usually expressed as multiple based on the above formula. For example If you spent 10,000 AED on a Talabat campaign and the revenue generated was 30,000 AED.

ROAS is (AED30,000/AED10,000) × 100 = 300% per AED spent on advertising.

Expressed as a multiple this is a ROAS of 2X as it’s 200% above the baseline of 100% (the amount spent on the campaign)

A 100% ROAS means you generated exactly the same in revenue as you spent on advertising. Anything less than 100% then you spent more money on the campaign than it generated in revenue.

When to use it

ROAS is often the quickest way of assessing the relative effectiveness of different advertising campaigns, and a high ROAS often means high performing ad campaigns.

However it’s important to understand that ROAS is not the same thing as ROI as it doesn’t take into account commissions, COGS and other associated costs. A high ROAS does not necessarily indicate a higher profit, it just looks at the amount of top line revenue generated for every marketing dollar spent.

What is a good food delivery marketing ROAS?

The average ROAS across delivery apps is between 2X and 3X using the default campaign settings.

However, I usually consider 2X or 3X ROAS quite low. With proper campaign optimization, a good ROAS is between 4X and 5X with outstanding performance reaching 6X to 7X.

6. Customer Acquisition Cost (CAC):

CAC represents the cost associated with acquiring 1 customer.

The formula is:

CAC = total spent/new customers acquired from that marketing spend

When to use it

Similarly to ROAS, CAC is another great metric to assess the efficiency of marketing spend. A low CAC indicates a high level of marketing efficiency and the ability to keep spending to acquire customers profitability.

By analyzing CAC, delivery companies can determine the scalability of their customer acquisition strategies. A manageable CAC is critical for sustainable growth.

It’s worth noting that in general, marketing CAC tends to go up over time as more and more people are exposed to your advertising. This is a totally normal trend and a progressively higher CAC doesn’t mean performance is poor.

Profitability Analysis: When compared to metrics like Customer Lifetime Value (CLTV), CAC can help you assess whether your customer acquisition strategy is sustainable. If the CAC is lower than the CLTV, it suggests that the business is profitable in the long term. This is where CAC provides extra insight that ROAS alone cannot tell you.

7. Contribution Margin

Contribution margin is a profitability metric that’s crucial to understand if your goal is profit. Contribution margin tells you how much profit you made from the campaign after all the costs associated with running the campaign.

For delivery marketing the formula is

Contribution margin = total revenue - (ad or discount spend + commission + food cost)

Let look at an example:

Say you ran a flash sale 30% discount campaign on a food delivery app for 5 days.

Over the five days, the campaign generated AED 30,000 in revenue. Because you discounted 30% you ended up spending AED9000 to run the campaign.

Your delivery app commission was 32%. The total commission you paid for the campaign was 32% of total revenue - the discount, or 32% of AED 21,000. So you paid AED 6720 in commission.

Your food costs are 35% of total revenue. Your total food cost was 35% of AED 30,000 so you spent AED 10,500 on the cost of food.

So plugging this into our formula:

Contribution margin = 30,000 - (9000+6720+10500)

or

30,000 - 26,220 = AED 3,780

For this marketing campaign, after you take into account the costs you’re left with AED 3780. This is your contribution margin.

When to use it

Contribution margin is how you measure profitability of campaigns. If the goal of marketing is profit then contribution margin is an essential metric to track. The best way to use it is by comparing the contribution margin of two different campaigns over the same time period to see which relatively added more profit to your business.

For discounting or offer strategies great technique is to compare the contribution margin of a time period when you had no discount running with the time period where you were running the campaign.

Because contribution margin takes into account the discount amount you offered, you can directly compare the profitability of campaign against running no offers at all. It's often the case that whilst discounting can drive revenue up by 4 or 5 times, the amount of profit left over is can be similar to running no offers at all.

You can use this information to make much more informed decisions about marketing in the future.

Learn more about contribution margin here.
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