A guide on how to set profitable menu prices for off-premise service (takeout, delivery, catering) for restaurants.

Setting profitable menu prices for off-premise services, including takeout, delivery, and off-site catering, is crucial for maintaining a healthy bottom line. As these services continue to grow, optimizing your pricing strategy to cover costs while still appealing to customers is essential. Here’s how to structure menu prices to ensure your restaurant thrives in off-premise dining.

Understand Your Costs

Before setting prices, you need a clear understanding of your costs. This includes:

• Food costs: The cost of ingredients for each dish. A common rule of thumb is to keep food costs between 25-35% of the menu price.
• Packaging costs: Off-premise orders require special packaging, which can add significant expenses.
• Labor costs: Include kitchen staff, delivery personnel, and support staff who handle off-premise orders.
• Delivery fees or commissions: If using third-party delivery services, you’ll need to account for their fees, which often range from 15-30%.
• Marketing and technology: Don’t forget the cost of promoting your off-premise services and the technology needed for online ordering.

Factor in Off-Premise-Specific Expenses

Takeout, delivery, and catering come with unique costs that in-house dining doesn’t have. Be sure to:

• Account for packaging: High-quality, leak-proof containers are more expensive than dine-in tableware. These costs should be factored into the price.
• Delivery and service fees: Some restaurants charge a small fee for delivery or handling off-premise orders to help cover extra costs.
• Discounting less profit-heavy items: While offering promotions or discounts can drive volume, be cautious. Ensure these discounts don’t eat into your profit margins.

Adjust for Customer Willingness to Pay

Your pricing strategy should reflect what your customers are willing to pay for the convenience of off-premise service. Research what competitors are charging for similar services in your area. Typically, customers are willing to pay more for convenience and specialized packaging. Off-premise menu items may also warrant higher prices due to the added costs involved.

Bundle Items for Value

Bundling items is an effective way to increase average order value and provide a perception of savings for customers. For example:

• Create family-sized meal deals for takeout or delivery.
• Offer catering packages that include sides, drinks, and desserts at a slight discount compared to ordering each item individually.

These bundles help simplify ordering for customers and increase your profit margins per transaction.

Offer Catering-Exclusive Menu Items

Off-premise catering often attracts different types of orders than in-house dining. Consider developing catering-exclusive menu items that are easy to transport and serve. These can be priced higher than individual menu items, reflecting the larger portions and the added value of serving larger groups.

Price for Profit, Not Just Cost

While covering your costs is important, your menu prices should also generate profit. A common strategy is to use a markup of 3x your food cost to cover other expenses like labor and packaging. For catering services, you may want to use an even higher markup due to the added complexity and preparation time.

Use Psychology in Pricing

Simple pricing strategies, like rounding down slightly (e.g., pricing at $9.95 instead of $10), can have a psychological impact on customers. It gives the perception of lower prices while maintaining your profit margins.

Review and Adjust Regularly

Finally, it’s important to revisit your pricing strategy periodically. As costs fluctuate—whether it’s due to rising food prices, delivery fees, or labor costs—adjust your menu prices to maintain profitability. Keep an eye on industry trends and customer feedback to ensure your prices remain competitive.

Ready to elevate your restaurant’s off-premise services?

Experience Takeout Button®’s powerful online ordering and catering solutions firsthand. Test our live demos at https://takeoutbutton.com/live-demo/ and schedule a free consultation at https://takeoutbutton.com/sign-up/. To see our existing clients, visit eatnowbutton.com.