Delivery pricing: why the menu price must differ

A dish that earns a healthy margin in the dining room can lose most of that margin the moment it is sold through a delivery platform. Commission takes a share of the price before the food is cooked, packaging adds a cost the dining room never sees, and refunds for problems on the road come out of what is left. Sell the dish at the same price, and the venue is doing more work for much less money.

That is why many venues charge different prices for delivery. It is a reasonable decision, but it needs care: raise prices too far and delivery guests go elsewhere, and guests who notice a large gap between the menu at the table and the one on their phone may feel the venue is taking advantage of someone.

This guide works through delivery pricing: why the same price can lose money, how far to raise it, why pricing by dish beats a blanket increase, the fees guests pay on top, and how to stay fair to the guests who walk in. Every figure in it is an example, and your own contracts and costs are what count.

In the dining room, a dish's price has to cover its ingredients, the labour to make and serve it, the venue's overheads and a profit. On a delivery platform, the same price has to cover all of that and the platform's commission, the packaging, and any refunds or promotions the venue pays for.

Commission is the largest of those. Depending on the platform, the market and whether the platform provides the driver, it can be a large share of the order value. Our guide to aggregator commission and the real cost of an order covers how it is calculated.

So a dish that leaves a comfortable margin at the table can leave very little in the box. Pricing delivery at dining room prices is not neutral: it quietly gives the platform much of the margin the dish was priced to earn.

Take an example dish with a dining room price, net of tax, of 20 and a food cost of 6. In the dining room, it earns a gross profit of 14 before labour and overheads.

Sold through a platform at the same price, with an example commission of 25%, the platform takes 5. Packaging adds an example 1. That leaves 20 minus 5, minus 1, minus 6 for the food: 8. The same dish earns 8 instead of 14, a fall of more than 40%, and that is before any refund or promotion.

Multiply that gap across hundreds of delivery orders a month and it becomes a large sum. It is also why delivery orders can look busy and leave the venue no better off.

The clearest way to think about delivery pricing is through gross profit per dish: the cash a dish leaves after the costs that vary with each sale. In the dining room, those costs are mostly the ingredients. On delivery, they include commission and packaging too.

Work out the delivery gross profit for every dish on the delivery menu, at the current price. Then compare it with the dining room gross profit for the same dish. The difference shows how much margin each dish gives up on delivery, and which dishes are worth sending at all. Our guide on why gross profit per dish beats food cost percentage explains why cash is the right measure.

Some dishes will still earn reasonably well. Others, often the ones with expensive ingredients and modest prices, will earn very little. That second group needs either a higher delivery price or a place off the delivery menu.

There are three broad approaches to delivery pricing.

The first is to keep the same prices as the dining room and accept a lower margin, treating delivery as a way to reach new guests and use spare kitchen capacity. That can make sense for a venue with quiet hours to fill, but it rarely works as the venue grows busier.

The second is to raise delivery prices enough to recover the full cost of the platform, so each delivery order earns the same cash as a dining room order. That protects the margin, but the increase is often larger than guests will accept.

The third, which many venues settle on, is a partial increase combined with a delivery menu designed for the channel: prices raised by a moderate amount, with dishes chosen and adapted so the margin holds.

Recovering the full cost is a useful calculation even if you do not use it. Take the example dish again. To earn the same 14 in the box as at the table, with a 25% commission and 1 of packaging, the price must satisfy: price, minus a quarter of the price, minus 1, minus 6, equals 14. That gives a delivery price of 28.

A dish that costs 20 at the table and 28 on the app is a 40% difference. Many guests would find that hard to accept, especially if they know the venue's dining room prices. Some would choose another venue; others would order less.

That is why full recovery is rarely the answer for every dish. But it shows the scale of the gap, and it gives a ceiling: the price above which a delivery dish earns more than its dining room equivalent.

Most venues find a middle path. They raise delivery prices by a moderate amount, often somewhere between a tenth and a fifth above the dining room, and close the rest of the gap through the delivery menu itself.

The delivery menu does a lot of the work. Dishes with lower food costs and good margins, such as braises, grain bowls and pizzas, can carry a modest increase and still earn well. Dishes with expensive ingredients and thin margins can come off the delivery menu altogether. Our guide to a delivery menu that is not your dining room menu covers how to build it.

In the example, a delivery price of 23 for the dish, 15% above the dining room, leaves 23 minus 5.75 in commission, minus 1, minus 6, which is 10.25: not the full 14, but far better than 8, at a price most guests will accept.

A single percentage increase across the whole delivery menu is simple, but it treats very different dishes the same way. A better approach is to set each delivery price with that dish's costs and margin in view.

Dishes that earn well on delivery even at a modest increase can carry a small one. Dishes whose margins shrink badly need a larger one, or a change of recipe or portion for delivery. Dishes guests compare closely with competitors, such as a classic burger or a standard pizza, may need to stay close to the market, while distinctive dishes have more room.

Look at the result as a whole, too. A delivery menu where every price has risen by a different amount can look erratic. Round prices to sensible figures, and keep the relationships between dishes similar to the dining room, so the menu still makes sense to a guest who knows it.

Some venues avoid direct comparison by offering dishes or portions that exist only on delivery. A meal box that combines a main, a side and a drink, a sharing platter or a family-sized portion has no exact equivalent in the dining room, so its price stands on its own.

Delivery-only dishes can also be designed for the box from the start, using ingredients and methods that travel well and cost less, so they earn properly at a price guests accept. They let the venue build a delivery offer around what works for delivery, rather than adapting the dining room menu dish by dish.

Be honest about portions. A delivery dish that is smaller than its dining room equivalent should be described as such. Guests who discover a smaller portion at a higher price feel misled, and they say so in reviews.

On many platforms, the guest pays fees on top of the food: a delivery fee, a service fee, a small-order fee. Depending on the platform and the arrangement, the venue may have some say in these, or none.

These fees affect how guests see the total price. A guest who pays a delivery fee and a service fee already pays noticeably more than the menu price, and a further increase in the food price adds to that. Look at the total a guest pays for a typical order, not just the dish prices, when judging whether delivery pricing is reasonable.

Where the venue runs its own ordering, it sets the fees itself. A modest delivery fee, clearly shown, is often easier for guests to accept than higher food prices, because it is visible and easy to understand.

A minimum order value protects the venue from small orders that cost more to fulfil than they earn. A single side dish ordered for delivery still needs packaging, still pays commission and still takes kitchen time, and may leave nothing at all.

Set the minimum so that the typical order at that value earns something after commission, packaging and food. Check whether the platform allows the venue to set it, or applies its own small-order fee instead.

A minimum order also encourages guests to add a side or a dessert to reach it, which helps the margin. Make sure the delivery menu has suitable items, such as sides, drinks and desserts, for guests who are just below the minimum.

Bundles, such as a main with a side and a drink at one price, work well on delivery. They raise the average order, reduce the share of each order taken by packaging and fixed costs, and give guests a simple, good-value choice.

Price bundles so they offer real value compared with ordering the items separately on delivery, while still earning a fair margin. A bundle that saves the guest a little and lifts the order value usually earns the venue more than the separate items would.

Bundles also help with comparison. A bundle has no exact equivalent in the dining room, so guests judge it on its own value rather than against the price of each dish at the table.

The hardest part of delivery pricing is fairness. Regulars who eat in the dining room may notice that the same dish costs more on the app, and wonder whether they are paying too little or the delivery guests too much.

Most guests understand, if it is explained. Delivery involves costs the dining room does not: commission, packaging, the platform's service. A short, honest note, on the venue's own ordering page or in answer to a question, such as "our delivery prices include the costs of the delivery platform and packaging", usually settles it.

What guests resent is a gap that seems unexplained or excessive. A moderate, explained difference is generally accepted; a large one, or one that looks hidden, is not. The aim is a delivery price that a regular would think fair if they saw it.

Before setting delivery prices, check the platform contract. Some contracts include clauses about how a venue's prices on the platform compare with its prices elsewhere, including on its own website. Such clauses are restricted or not allowed in some places, so check what applies where you trade.

Check also how quickly the venue can change prices on the platform, and whether it can set them itself. A venue that must ask the platform to change each price, and wait days for it to happen, cannot respond quickly to changing costs.

Our guide to delivery aggregators, the deal read properly covers the other clauses worth reading before signing.

If the venue takes orders through its own website or phone line, it can price that channel differently from the platforms. Because there is no platform commission, prices on the venue's own channel can be lower than on the apps, often close to the dining room.

That creates a useful incentive. Guests who learn that ordering directly is cheaper, or comes with a small benefit, may switch to the venue's own channel, where the venue keeps more of each order and the relationship with the guest. A card in every delivery bag can tell them.

Check the platform contract before doing this, for the reasons above. And make sure the venue's own channel is as easy to use as the apps; a cheaper price on a clumsy website will not win many guests.

The principles of menu pricing psychology apply on delivery screens too, though guests read them differently. Guests on a delivery app compare venues side by side, often on price, so the headline price of the most popular dishes matters more than on a printed menu.

Keep prices round and consistent. Use a strong dish near the top of the menu as an anchor, and make sure the bundles and sides that lift the order value are easy to find. Our guide to menu pricing psychology that is not a trick covers what the evidence supports.

Remember, too, that guests see the total at checkout, including the platform's fees. A delivery menu that looks competitive dish by dish but ends with a surprisingly high total may lose orders at the last step.

Delivery prices should be reviewed regularly, because commission, packaging and food costs all change. Look at each delivery dish's gross profit at its current price, how often it is ordered and what share of delivery sales it takes.

Test changes carefully. Raise the price of a few dishes and watch whether their orders fall, and by how much. The way demand responds to price, what economists call price elasticity of demand, differs from dish to dish. Some dishes keep selling after a rise; others fall away. Your own results, not general rules, show which is which.

Review the whole delivery offer at least twice a year: prices, the delivery menu, fees and the minimum order, against what the channel actually earns.

An invented Italian restaurant lists its menu on a delivery platform at dining room prices. Its most popular delivery dish, a lasagne at a net price of 16 with a food cost of 4.50, earns 11.50 in the dining room. On delivery, after an example commission of 25% and packaging of 1, it earns 16 minus 4, minus 1, minus 4.50: 6.50.

The restaurant works out each dish's delivery gross profit. It raises the lasagne to 18.50 on delivery, which leaves 18.50 minus 4.63, minus 1, minus 4.50, about 8.37. It removes two delicate, expensive dishes from the delivery menu, adds a family lasagne and a pasta meal box at delivery-only prices, and sets a minimum order. On its own website, where there is no commission, it keeps prices close to the dining room and offers free delivery nearby.

Delivery orders dip slightly at first, then recover as the meal boxes catch on. Each order now earns noticeably more, and a growing share of guests order through the restaurant's own site. Regulars who ask about the price difference accept a short explanation.

servearound does not take delivery or takeaway orders and does not connect to delivery platforms today, so delivery prices are set on the platforms or ordering service you use, and the margin calculations stay in your own sheet. servearound holds the dining room side that delivery prices are worked out from: each dish's price, description and allergen and dietary tags, and the menu report's units, revenue and share of sales for every dish over any dates.

For its own menus, prices can be changed in bulk by a percentage or an amount, with a preview of each dish's old and new price, and each menu can charge its own price for a dish. servearound does not hold dish costs today, so gross profit per dish comes from your own costing. See the menus module.

Because delivery orders carry costs the dining room does not, chiefly commission and packaging, which can cut a dish's margin sharply at the same price.

Many venues settle on a moderate increase, often somewhere between a tenth and a fifth, combined with a delivery menu designed so the margin holds. Work it out dish by dish.

Calculate it, because it shows the scale of the gap, but recovering it in full on every dish usually means prices guests will not accept.

Better not. Set each delivery price with the dish's costs, margin and competition in view, then round the results so the menu still makes sense.

Meal boxes, sharing platters and family portions have no exact dining room equivalent, so they can be priced and designed for delivery on their own terms.

Keep the difference moderate and explain it honestly: delivery prices include the platform's costs and packaging.

Often, because there is no platform commission, but check your platform contract for any clause about prices elsewhere.

Yes, at a level where a typical order still earns something after commission, packaging and food.

Whenever commission, packaging or food costs change significantly, and at least twice a year as part of a review of the whole delivery offer.

Delivery pricing has to cover costs the dining room never sees: commission, packaging, refunds and promotions. At dining room prices, a dish can lose much of its margin in the box, so work out the delivery gross profit for every dish, and use the full-recovery price as a ceiling rather than a target.

Most venues do best with a moderate increase, set dish by dish and rounded sensibly, combined with a delivery menu of dishes that travel and earn well, delivery-only bundles and portions, and a minimum order. Look at the total the guest pays, check the platform contract, price your own channel to reward direct orders, explain the difference honestly to regulars and review delivery prices as costs change.