Cost of goods sold in a restaurant is typically discussed in terms of food and beverage — the ingredients that make up the menu. But COGS is broader than that, and in restaurants with meaningful takeout, delivery, or catering volume, packaging costs can become a significant line item that deserves its own analysis and management discipline.
Packaging — the containers, bags, lids, napkins, utensils, sauce cups, and other disposables that accompany off-premise orders — is a cost of goods sold in the most literal sense: it is a direct cost of producing and delivering the product to the guest. When it is not tracked explicitly, it hides inside the food cost percentage, inflating it above what the kitchen is actually spending on ingredients and creating a distorted picture of where COGS is going.
The Scale of the Problem
Packaging costs vary enormously by concept and off-premise volume. A full-service restaurant doing 10 percent of sales as takeout might spend $0.75 to $1.50 per takeout order on packaging. A fast-casual concept doing 60 percent of sales off-premise might spend $1.50 to $3.00 per order. At meaningful volume, these numbers add up quickly.
A restaurant doing 100 takeout and delivery orders per day at an average packaging cost of $1.50 spends $54,750 per year on packaging. That is real money — equivalent to a line cook’s annual salary, or the entire marketing budget for a modest operation. It deserves to be tracked separately, managed actively, and included in any analysis of off-premise profitability.
What to Track and How
The starting point is a purchasing audit: pull the last three months of supply invoices and identify every packaging-related line item. Containers, bags, lids, utensils, napkins, deli paper, sauce cups, tamper-evident stickers — all of it. Calculate the monthly spend and express it as a percentage of off-premise sales.
Once you have a baseline, you can evaluate it against what it should be given your volume. Divide total monthly packaging spend by the number of off-premise orders to get cost per order. Then ask: is this reasonable given the containers we use, and is there room to optimize?
Reducing Packaging Cost Without Compromising the Guest Experience
Packaging cost optimization is not about using cheaper containers and hoping guests do not notice. It is about right-sizing the packaging for the product, eliminating unnecessary items, and negotiating better pricing on the items you cannot eliminate.
Right-sizing containers. Using a container that is larger than the portion requires not only wastes money on the container itself — it also makes the presentation look sparse and may signal poor value to the guest. Containers should fit the portion. This sounds obvious but is frequently mismanaged, particularly in operations where the container specification was set at opening and never revisited as the menu evolved.
Eliminating unnecessary items. Many restaurants default to including napkins, utensils, soy sauce packets, or other condiments with every order, regardless of whether the guest requested them. For dine-in guests ordering delivery, these items are often unnecessary — the guest has silverware at home. A default to “available on request” for utensils and condiments, rather than “included automatically,” can reduce packaging cost per order by $0.20 to $0.40 without any guest experience degradation for the vast majority of orders.
Volume purchasing and supplier negotiation. Packaging is a commodity category with real pricing variation across suppliers. Independent restaurants that purchase from a restaurant supply store at retail pricing are typically paying meaningfully more than those who purchase directly from a packaging distributor on volume terms. As off-premise volume grows, consolidating packaging purchasing with a single supplier and negotiating volume pricing is worth the time.
Compostable and sustainable packaging. There is a real cost premium for compostable packaging over standard plastic — often 20 to 40 percent higher per unit. For operators in markets where sustainability is a meaningful guest value (and where it genuinely drives preference), this premium may be justified as a marketing investment. For operators where it is not, the premium is a cost without a corresponding revenue benefit, and standard packaging at lower cost is the more defensible choice.
Packaging in the Off-Premise P&L
When evaluating the profitability of your off-premise business — takeout, delivery, catering — packaging cost should be included as a direct cost of that channel, separate from the food cost of the items sold. This allows you to see the true margin of off-premise revenue compared to dine-in, where packaging is essentially zero.
A delivery order with a $40 menu price, a 30 percent food cost ($12), a third-party platform commission of 25 percent ($10), and a packaging cost of $1.50 nets $16.50 in gross profit — a 41 percent gross profit margin. The same order in the dining room, with no commission and no packaging cost, nets $28 — a 70 percent gross profit margin. Tracking packaging separately is what makes this comparison visible and honest.
The author is a former CFO for a multi-unit restaurant brand. RestaurantBottomLine.com is dedicated to helping independent operators protect their financial model.
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