In plain words
A restaurant sells meals through a delivery app that keeps a commission. Is revenue the full menu price or the net amount the app remits? If the restaurant controls the meal until handover, sets the price and bears spoilage and wrong-order risk, it is the principal: revenue is the full price and the commission is an expense. Profit is unchanged, but reported revenue and margins differ.
Why it matters
Gross-versus-net presentation does not change profit but can materially change reported revenue size, margin ratios, and covenant/KPI calculations lenders and investors rely on, so an unsupported netting decision distorts perceived scale and is a common audit finding.
Diagnostic questions
Who sets the final menu price to the end customer and bears inventory/spoilage risk before delivery? Who is primarily responsible for fulfilling the order and resolving customer complaints? Does the platform have discretion in pricing, or does it simply pass through the outlet's listed price?
Recognition
- Identify the specified good/service to be provided to the end customer (the prepared meal, and separately, delivery logistics if distinguishable).
- Determine, for each specified good/service, whether the restaurant obtains control before transfer to the customer, assess primary responsibility for fulfillment, inventory/spoilage risk before handover, and discretion in setting the price.
- Conclude principal (gross revenue, commission as expense) or agent (net commission as revenue) separately for the food and for the delivery leg if the platform's role differs between them.
- Recognize gross food revenue at the point the order is fulfilled/handed to the customer or rider (restaurant retains control up to that point in the typical model).
- Record the aggregator's commission as an operating expense (marketing/distribution), not a deduction from revenue, when the restaurant concludes it is principal.
- Revisit the conclusion whenever aggregator contract terms change materially (e.g., a shift to a model where the platform sets final price or takes on refund/quality risk).
Measurement
Measure gross revenue at the menu/selling price charged to the end customer for the food, regardless of the net amount the aggregator remits. The commission retained by the platform is measured and presented as a distribution/marketing expense at the contractual commission rate. If discounts are funded jointly by the restaurant and the platform, allocate only the restaurant-funded portion as a reduction of transaction price; platform-funded discounts that do not reduce restaurant's entitlement should not reduce restaurant revenue. Subsequently, no further remeasurement is needed once the order is fulfilled, aside from normal return/complaint refund estimates.
Presentation & disclosure
Disaggregate revenue by channel (dine-in, takeaway, delivery/aggregator); disclose the principal-versus-agent judgment and key indicators considered (control, inventory risk, pricing discretion); disclose aggregator commission expense separately within operating expenses if material; disclose consistency (or documented differences) of treatment across major aggregator contracts; disclose any change in gross/net conclusion during the period and its revenue effect.
Common mistakes
- Netting aggregator commissions against revenue as a default policy without performing or documenting a control assessment
- applying the same gross/net conclusion to all aggregators despite materially different contract terms
- ignoring that the restaurant, not the platform, typically bears spoilage/wrong-order risk before pickup
- failing to reassess the conclusion when a platform renegotiates terms to take on pricing discretion or refund responsibility
- recording platform-funded promotional discounts as a reduction of the restaurant'
- s own revenue.
Simple example
A restaurant sells a meal for SAR 60 through a delivery app on a model where the restaurant sets the menu price and bears spoilage/wrong-order risk until handover to the rider. The app collects SAR 60 from the customer and remits SAR 48 after a 20% commission. At order fulfillment (recognize gross revenue and record the amount due from the aggregator): Dr Accounts receivable – aggregator 60 / Cr Food revenue 60 Record the aggregator's commission as a distribution expense: Dr Distribution/commission expense 12 / Cr Accounts receivable – aggregator 12 Cash settlement from the aggregator: Dr Cash 48 / Cr Accounts receivable – aggregator 48
Professional judgment
The genuine grey area is last-mile delivery logistics: food fulfillment control is usually clear (restaurant principal), but where the platform's own riders perform delivery and the platform bears delivery-specific service failures, the delivery service itself may be a separate specified service where the platform is principal, requiring a split conclusion rather than one blanket answer. Judgment is also needed when platforms have increasing pricing discretion (dynamic pricing, platform-funded promotions) or take on refund/quality-guarantee obligations directly with the customer, which can shift the food conclusion toward agent over time; conclusions should be contract-specific and revisited as aggregator terms evolve.
Source basis
IFRS 15 · Revenue from Contracts with Customers
Paragraph references
Verified against the official standard texts used in the IFRS Expert skill.
Related issues
Educational and navigation content only. Not professional advice. Does not reproduce official IFRS/IAS text. Consult the authoritative standards and qualified professionals; professional judgment may still be required.