How to pay restaurant delivery drivers: hourly, per delivery, and mileage
Updated October 20, 2026
The simplest way to pay your own delivery drivers is an hourly wage, sometimes plus a small amount per delivery, with the cost of the driver's car repaid per mile. Whatever model you pick, two rules decide what it really costs: the driver must earn at least the minimum wage for every hour, and the cost of the car you require them to use can't push their pay below it. Many restaurants repay mileage at the IRS business rate, 76¢ a mile from July 1 to December 31, 2026. The U.S. Department of Labor calls that rate "per se reasonable" but doesn't require it.
In short
- Three pay models: hourly; hourly plus a per-delivery amount; or per delivery only. In a high-minimum-wage state they end up costing about the same, because you top up any shortfall.
- Minimum wage counts after car costs. Under the federal "free and clear" rule, unreimbursed car costs that cut into the minimum wage are a violation.
- Mileage: the IRS rate (76¢ a mile, second half of 2026) is presumptively reasonable under a 2020 DOL letter. A lower rate can work federally if it reasonably approximates real costs; California requires you to repay necessary expenses.
- Count there and back. A 2.5-mile delivery is 5 miles of driving.
- Tips are on top and belong to the driver. See delivery driver tips.
What are the ways to pay a restaurant delivery driver?
| Pay model | How it works | Good for | Watch out for |
|---|---|---|---|
| Hourly | A wage for every hour on shift, waiting time included | Steady shifts; simplest payroll | You pay for quiet hours |
| Hourly + per delivery | A lower hourly wage plus a fixed amount for each delivery | Rewarding busy shifts | The hourly part plus the per-delivery part must still reach the minimum wage for all hours |
| Per delivery only | A fixed amount per delivery, no hourly wage | Rarely a good fit for employees | Slow shifts can fall below the minimum wage; you must top up |
| Mileage on top (any model) | A set amount per mile driven for the business | Drivers using their own cars | Must be paid separately from wages, with mileage records |
A driver who uses a car the restaurant owns doesn't need mileage repaid: you pay the fuel, upkeep and insurance directly.
Worked example: one Friday shift, three ways to pay
One driver, a 5-hour shift, 12 deliveries, an average of 2.5 miles each way, so 60 miles of driving there and back. Mileage is repaid at the IRS rate of 76¢. We run it in California (state minimum $16.90 an hour) and in Texas (federal minimum $7.25).
| One shift | Hourly $16.90 | $12.00 an hour + $2.00 a delivery | $6.00 a delivery only |
|---|---|---|---|
| Pay before top-up | $84.50 | $60.00 + $24.00 = $84.00 | $72.00 |
| Effective hourly rate | $16.90 | $16.80 | $14.40 |
| California minimum for 5 hours ($84.50) | Met | Short $0.50: top up | Short $12.50: top up |
| Texas / federal minimum ($36.25) | Met | Met | Met |
| Mileage, 60 miles × 76¢ | $45.60 | $45.60 | $45.60 |
| Cost in California (pay + top-up + mileage) | $130.10 | $130.10 | $130.10 |
| Per delivery in California | $10.84 | $10.84 | $10.84 |
| Employer payroll taxes (7.65% of wages) | about $6.46 | about $6.46 | about $6.46 |
What the numbers say:
- In California the three models cost exactly the same on this shift, because the minimum wage sets the floor and each model is topped up to it. The model only changes what the driver earns on a busy shift.
- In Texas they differ, but only above the $7.25 floor. Per-delivery pay looks cheaper on paper; on a slow night (say 3 deliveries in 5 hours at $6) the driver earns $18, and you top up to $36.25.
- Mileage is about a third of the cost. At 60 miles a shift, mileage is $45.60 of $130.10. That's why a tight delivery zone matters as much as the wage.
Run your own month in the free own delivery cost calculator, which uses the same wage, payroll-tax and mileage logic.
Do restaurants have to pay drivers for gas and mileage?
Under federal law, you must repay enough of the car cost that the driver still nets at least the minimum wage. The Department of Labor's opinion letter FLSA2020-12 (August 31, 2020), written for a company whose drivers deliver pizza in their own cars, says:
- You can repay actual expenses or a reasonable approximation of them.
- A rate based on the IRS standard mileage rate is "per se reasonable", but the IRS rate is not legally required.
- Whether you must also cover fixed costs (insurance, registration) depends on whether the car is used primarily for your benefit. When it isn't, you repay the variable costs of the miles driven for you: gas, maintenance and the wear those miles cause.
Two cautions:
- Courts have disagreed. The DOL letter notes that some federal courts read the agency's field handbook as allowing only actual expenses or the IRS rate. Paying the IRS rate avoids that argument.
- States can require more. California Labor Code §2802 requires employers to repay employees for "all necessary expenditures or losses" from doing their job. Many California restaurants use the IRS rate for this; ask your accountant what fits your state.
How do I record mileage for my drivers?
You need a record you can defend: date, order, and miles driven for each trip.
- A simple log. The driver writes the start and end odometer for each shift, or the miles per delivery. Check it against the orders delivered.
- A fixed mileage table. Some restaurants pay a set number of miles per zone (for example, 3 miles round trip for the inner zone). That's an approximation, so keep the method on file.
- Use the delivery records you already have. In Menuthere, the rider list shows each driver's deliveries, order value, delivery charges and a Distance total for the period you pick. That distance is a straight line, one way, in kilometres, so it's a minimum, not a payout figure: real road miles there and back are always higher. Use it to sanity-check a driver's log, not to replace it.
How is driver mileage taxed?
IRS Publication 463 explains that a car allowance paid under an accountable plan (drivers account for the business miles within a reasonable time) that is not more than the federal rate isn't included in box 1 of the employee's Form W-2. Pay above the federal rate, and the excess counts as wages. Keep mileage out of the hourly wage line so it isn't taxed as pay by mistake.
How do I set up pay for my own delivery drivers?
- Check your state and city minimum wage on the Department of Labor's state table. Some cities set a higher rate.
- Choose a pay model from the table above and write it down: hourly rate, any per-delivery amount, and how you top up.
- Choose a mileage method: the IRS rate, a reasonable lower rate (not in California without advice), or the restaurant's own car.
- Set how drivers log miles and when they hand in the log (every payday works).
- Decide how tips reach drivers, separately from wages. See delivery driver tips.
- Price delivery to cover it. Set your delivery fee from your real cost per mile with the delivery fee calculator.
- Review after a month. Compare deliveries per driver-hour and mileage per delivery, and rerun the calculator.
How Menuthere helps with your own drivers
- Driver app on iPhone and Android (Pro, $39 a month): drivers sign in with the phone number and password you set, get a New Delivery Assignment notification and mark orders delivered.
- Delivery figures per driver: deliveries, order value, delivery charges and straight-line distance for any period, with an order-by-order breakdown. See your own delivery riders.
- No per-delivery fee from Menuthere, so your cost per delivery is wages, mileage and insurance only.
What Menuthere doesn't do: it doesn't run payroll, pay drivers, track road mileage or settle tips. You assign each order to a driver yourself; there's no automatic dispatch or route optimization. More on the whole set-up in in-house delivery for restaurants.
Run your own drivers with live tracking and no per-delivery fee. then. Plans:.
More own-delivery guides: hiring drivers, job description template, tips, insurance, employees or contractors, delivery radius and zones, keeping food hot. The overview with costs: in-house delivery for restaurants.
Frequently asked questions
Is it better to pay delivery drivers hourly or per delivery?
Hourly is simpler and safer for employees, because every hour is covered. Per-delivery pay only rewards busy shifts, and you must still top up to the minimum wage for all hours worked. In a state like California, both cost the same on a slow shift once the top-up is added.
Do I have to use the IRS mileage rate?
Not under federal law. The DOL's 2020 opinion letter says a reasonable approximation of the driver's costs is enough and that the IRS rate is presumptively reasonable. Some courts have read the rules more strictly, and states such as California require you to repay necessary expenses, so many restaurants use the IRS rate: 76 cents a mile from July 1 to December 31, 2026.
Can delivery drivers be paid less than minimum wage because they get tips?
In states that allow a tip credit, an employer can pay a cash wage as low as $2.13 an hour under federal law if tips bring the driver to the full minimum wage, with notice and top-ups. California, Washington, Oregon, Nevada, Minnesota, Alaska and Montana require the full state minimum before tips.
Do I pay mileage for the trip back to the restaurant?
Yes, if the driver drives it for your business. Count miles there and back: a 2.5-mile delivery is about 5 miles of driving.
Does Menuthere calculate driver pay?
No. Menuthere shows each driver's deliveries, delivery charges and a straight-line, one-way distance in kilometres for the period you pick. It doesn't run payroll or work out mileage pay; use it to check your drivers' mileage logs.
Sources (9)
- U.S. Department of Labor, Wage and Hour Division, Opinion Letter FLSA2020-12 (August 31, 2020): https://www.dol.gov/sites/dolgov/files/WHD/opinion-letters/FLSA/2020_08_31_12_FLSA.pdf (PDF read 20 Oct 2026): reimbursement "reasonably approximates the expenses incurred" (29 CFR 778.217(a)); IRS-based amount "is per se reasonable" (§778.217(c)); conclusion: "the IRS business standard mileage rate is not legally mandated by WHD's regulations but is presumptively reasonable; and reimbursement for fixed and variable vehicle expenses hinges on whether the cost at issue primarily benefits the employer"; footnote 4 on Hatmaker and Zellagui (courts reading FOH 30c15 as actual-or-IRS only).
- 29 CFR 531.35, "free and clear": https://www.law.cornell.edu/cfr/text/29/531.35 (read 20 Oct 2026, Wave 1).
- California Labor Code §2802(a): https://leginfo.legislature.ca.gov/faces/codes_displaySection.xhtml?lawCode=LAB§ionNum=2802 (read in a browser 20 Oct 2026, Wave 1): "all necessary expenditures or losses incurred by the employee in direct consequence of the discharge of his or her duties".
- IRS, Standard mileage rates: https://www.irs.gov/tax-professionals/standard-mileage-rates (read 20 Oct 2026, Wave 1): 72.5¢ (1 Jan – 30 Jun 2026), 76¢ (1 Jul – 31 Dec 2026, IR-2026-29).
- IRS Publication 463 (2025), chapter 6: https://www.irs.gov/publications/p463 (read 20 Oct 2026): an allowance at or below the federal rate under an accountable plan "won't be included in box 1 of your Form W-2"; above the federal rate, the excess is wages.
- IRS Topic no. 751: https://www.irs.gov/taxtopics/tc751 (read 20 Oct 2026, Wave 1): employer social security 6.2% + Medicare 1.45%.
- U.S. Department of Labor, State Minimum Wage Laws: https://www.dol.gov/agencies/whd/minimum-wage/state (last updated July 1, 2026; read 20 Oct 2026, Wave 1): CA $16.90; TX and federal $7.25.
- U.S. Department of Labor, Minimum Wages for Tipped Employees: https://www.dol.gov/agencies/whd/state/minimum-wage/tipped (last updated July 1, 2026; read 20 Oct 2026): federal cash wage $2.13; full minimum before tips in AK, CA, MN, MT (business-size rule), NV, OR, WA (and Guam).
- Worked example: arithmetic by hand, checked in Python (5 h × $16.90 = $84.50; 60 mi × $0.76 = $45.60; $84.50 × 7.65% = $6.46; $130.10 ÷ 12 = $10.84).