Analysis: Delivery fees stayed cheap as many food delivery workers were misclassified as self-employed contractors rather than employees
Most of us don’t think much about how our takeaway gets to us, beyond a passing frustration when the rider is late or when items are missing. We haven’t moved on from the model of food delivery in the 1980s, when it cost around £1 or £2 to have a takeaway delivered from the local Chinese. For decades there was little to think about. The transaction stayed local, with the takeaway offering delivery within a small radius, and the driver probably worked for the restaurant.
That model has been replaced by something far more complicated. Your takeaway is now ordered through a platform likely headquartered in California and delivered by a worker whose employment status was contested in the Supreme Court for years. Delivery fees have stayed cheap for the last number of years because many food delivery workers were classified as self-employed contractors rather than employees. The Supreme Court has ruled that such a classification is wrong, and consumers will see this change reflected in the cost of their takeaways in spite of the impending VAT reduction.
It is important to distinguish between two different delivery models that now coexist in the market. Some takeaways are delivered by vertically integrated chains such as Domino’s, which operate their own ordering systems and employ (or are now required to employ) their own drivers. Others are delivered through third-party platforms such as Deliveroo, Just Eat and Uber Eats, which sit between restaurant and customer and coordinate delivery across multiple independent businesses. The way labour costs feed into prices is different in each case.
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The subsidy hidden in your delivery fee
The reason platforms could deliver food at the prices they charged was due to delivery fees being subsidised in part by the widespread misclassification of food delivery workers as self-employed contractors rather than as employees. That classification stripped employer PRSI, holiday pay, sick pay, pension contributions and minimum wage protections from the cost of each delivery.
Combined with platform losses funded by investor capital, this allowed delivery fees to be priced well below the true cost of providing the service. The delivery fee was negligible because the cost of basic employment rights for the people delivering the meal was never priced into the bill. Revenue describes this practice as “bogus self-employment” and it is the model that the Supreme Court ended in October 2023.
What the Supreme Court ruling changed
In Revenue Commissioners v Karshan (Midlands) Ltd t/a Domino’s Pizza, a seven-judge Supreme Court unanimously held that the company’s delivery riders were employees. Revenue chairman Niall Cody told the Public Accounts Committee earlier this year that the ruling is “relevant across all sectors”, and a voluntary disclosure window opened to let employers regularise their position. By the time it closed on 30 January, more than 280 employers had come forward, and Revenue had identified €26.7 million in taxes due from businesses that had misclassified more than 6,600 workers. The cost of treating the person who delivers your takeaway as an employee has moved from optional to mandatory.
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The most useful evidence of what this actually means commercially became evident in March. Domino’s Pizza Group’s 2025 results recorded a £10.4m (€12m) impairment charge against its Shorecal franchise, which runs about a third of Domino’s outlets in Ireland, alongside a £1m (€1.15m) payment to Revenue. The company attributed the charge to a “permanent change in labour structure” which “changed the cost of delivery across the industry”. This is a publicly listed multinational telling its own shareholders that the cost of delivering food in Ireland has gone up, and that the increase is permanent.
The major delivery platforms operating in Ireland, including Deliveroo, Just Eat and Uber Eats, have not publicly altered how they classify their riders in response to the Supreme Court judgement. Legal commentary has noted that the Karshan ruling, which involved a Domino’s franchise arrangement, does not automatically extend to other platforms whose operating models differ.
But that position is likely to narrow significantly. The EU Platform Workers Directive, which Ireland must transpose by 2nd December this year, will introduce a presumption of employment for platform workers across the bloc. Platforms have the right to challenge this presumption if they can prove workers are genuinely self-employed and autonomous. The platforms are already restructuring their economics in other ways. Deliveroo, for instance, recently introduced a “bundles” feature in Ireland allowing customers to order from up to three shops for a single delivery fee, with riders sometimes dispatched to multiple locations on one trip.
For some smaller independents, the combined pressure will make continued participation on these platforms financially unviable.
Where the cost has to land
Once delivery is priced at its actual cost, someone has to pay. Restaurants cannot absorb it on margins of 3 to 5%. Platforms are unlikely to absorb it either, as the delivery sector consolidates and investors look for a return after a decade of subsidised growth. That leaves the consumer most exposed. With a Domino’s order, the delivery function sits inside a vertically integrated business. The company controls both the food operation and the delivery labour, so any increase in the cost of employing riders feeds directly into the price of the order
With platforms such as Deliveroo, Just Eat or Uber Eats, delivery is coordinated across a network of restaurants and riders. The cost is therefore dispersed across several layers of the transaction rather than absorbed within one company’s balance sheet. Menu prices on apps are already typically higher than in-store for the same dish, reflecting platform commissions and delivery economics, and that gap is likely to widen as labour costs rise. Delivery and service fees are also likely to increase. For some smaller independents, the combined pressure will make continued participation on these platforms financially unviable.
The VAT cut won’t reach your delivery
On 1st July 2026, the VAT rate on food-led hospitality, including “hot takeaway”, returns to 9% from 13.5%. It will lower the sector’s tax bill by more than €600 million in a full year, and it may keep some struggling restaurants open. But what it will not do is bring down the price of having your takeaway delivered as the VAT cut applies to the food, not delivery costs.
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The VAT measure also sits alongside a longer-running debate about labour costs in hospitality. The sector has sought tax relief on the basis that margins are unsustainable. At the same time, parts of the hospitality lobby who campaigned for the VAT reduction have argued that planned minimum wage increases and the path to a Living Wage place unbearable strain on those same margins.
The platform model the Supreme Court has now effectively dismantled was built on the same suppression of labour costs that made below-cost delivery pricing possible. A hospitality economy built on suppressed wages at one end and tax subsidies at the other is unlikely to be sustainable.
What we are actually paying for
Investor capital absorbed the platforms’ operating losses, while suppressed employment costs covered the rest. Both subsidies are now ending, and the price being charged to customers will need to make up the difference.
The sector’s response is not yet clear. Some restaurants may reduce reliance on third-party platforms and bring more deliveries in-house where they can serve a small local area. Others may explore cooperative platform models, where restaurants and riders own the infrastructure connecting them to consumers.
Across Europe, similar pressure has been building. Italian courts have ordered Deliveroo and Uber Eats to pay backdated social security contributions for riders found to have been misclassified. Ireland is later to this conversation than most of its European neighbours, but the direction of travel is the same.
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The views expressed here are those of the author and do not represent or reflect the views of RTÉ
