External package labels for chilled delivery cost money and impact your profit margin. Many hospitality entrepreneurs forget to include these costs in their food cost, which means they're losing money without realizing it. In this article, you'll learn step-by-step how to correctly process label costs in your dish cost price.
What are external package label costs?
External package labels are special stickers or tags you need to use for chilled delivery. They often contain temperature indicators, expiration dates, and tracking codes. These labels cost between €0.15 and €0.45 per unit, depending on the type and your order volume.
💡 Example:
You use temperature labels from an external supplier for your fresh meals:
- Cost per label: €0.25
- Deliveries per month: 800 units
- Monthly costs: €200
Per delivery order: €0.25 extra costs
Why these costs are often forgotten
Many entrepreneurs see package labels as 'small costs' and forget to include them in their cost price calculation. That's a mistake. With 800 deliveries per month, this costs you €2,400 per year. If you don't pass these costs on, they come straight out of your profit.
⚠️ Note:
Calculate label costs per order, not per dish. If someone orders 3 dishes, you only use 1 label for the entire order.
How do you calculate the impact on your margin?
The formula is simple: you divide the label costs by the average order value excluding VAT. This gives you the percentage that these costs eat into your margin.
Formula:
Impact % = (Label costs per order / Average order value excl. VAT) × 100
💡 Example calculation:
Situation: Average order €32.00 incl. 9% VAT, label costs €0.30
- Order value excl. VAT: €32.00 / 1.09 = €29.36
- Impact: (€0.30 / €29.36) × 100 = 1.02%
These labels cost you just over 1% of your margin per order
Three ways to account for label costs
You can pass on label costs in different ways in your pricing:
- Option 1: Fixed surcharge per order (€0.50 'packaging costs')
- Option 2: Percentage surcharge on all delivery dishes (1-2%)
- Option 3: Increase your minimum order amount to cover costs
Which option works best?
For small hospitality businesses, option 1 (fixed surcharge) often works best. It's transparent to the customer and fully covers your costs. Many delivery restaurants charge €0.50 to €1.50 in 'packaging costs' which includes label costs.
💡 Practical example:
Restaurant with €0.35 label costs per order:
- Charges €0.75 packaging costs
- Covers label costs + regular packaging
- Margin: €0.40 extra per order
At 600 orders/month = €240 extra margin
Recording in your cost price system
Treat label costs as 'indirect packaging costs' in your administration. In an app like KitchenNmbrs, you can record this as a standard cost item that's automatically included in your margin calculations.
The most important thing is that you don't forget these costs and pass them on consistently. Otherwise, you'll lose profit without realizing it.
How do you calculate label costs in your food cost? (step by step)
Calculate your actual label costs per order
Add up what you pay per label including any setup or shipping costs from your supplier. Divide this by the number of labels you actually use per month.
Determine your average order value excl. VAT
Take your total delivery revenue from last month and divide by the number of orders. Convert this to excl. VAT by dividing by 1.09.
Calculate the margin percentage that labels cost
Divide your label costs per order by your average order value excl. VAT and multiply by 100. This percentage comes straight out of your profit.
Determine your pass-through strategy
Choose between fixed packaging costs (€0.50-€1.50), percentage surcharge on all dishes, or increasing your minimum order amount to cover the costs.
✨ Pro tip
Negotiate with your label supplier for volume discounts starting at 1,000 units per month. You often get 10-20% off, which directly improves your margin.
Calculate this yourself?
In the KitchenNmbrs app you can do this in just a few clicks. 7 days free, no credit card.
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Frequently asked questions
Can I deduct label costs as business expenses?
Yes, package labels are regular business costs that you can deduct. Keep your invoices from the label supplier for your accounting.
Do I have to pay VAT on packaging costs that I pass on?
Yes, if you pass on packaging costs to customers, there's 9% VAT on it (same rate as food). So charge €0.75 incl. VAT if you want to receive €0.69 excl. VAT.
What if customers complain about extra packaging costs?
Explain that it's necessary for chilled delivery and food safety. Many customers accept this if you emphasize that it guarantees the quality of their food.
Can I use cheaper labels to save costs?
Be careful with very cheap labels. For chilled delivery, you need reliable temperature indication. It's better to save by buying larger volumes.
How often should I recalculate my label costs?
Check this every 3 months. Label prices can change and your order volume grows, which might get you a discount from your supplier.
📚 Sources consulted
- EU Verordening 852/2004 — Levensmiddelenhygiëne (2004) — Official source
- EU Verordening 853/2004 — Hygiënevoorschriften voor levensmiddelen van dierlijke oorsprong (2004) — Official source
- EU Verordening 1169/2011 — Voedselinformatie aan consumenten (2011) — Official source
- NVWA — Hygiënecode voor de horeca (2024) — Official source
- NVWA — Allergenen in voedsel (2024) — Official source
- Codex Alimentarius — International Food Standards (2024) — Official source
- FSA — Safer food, better business (HACCP) (2024) — Official source
- BVL — Lebensmittelhygiene (HACCP) (2024) — Official source
- Warenwetbesluit Bereiding en behandeling van levensmiddelen (2024) — Official source
- WHO — Foodborne diseases estimates (2024) — Official source
Food Standards Agency (FSA) — https://www.food.gov.uk
The HACCP standards shown in this application are for informational purposes only. KitchenNmbrs does not guarantee that displayed values are current or complete. Always consult the FSA or your local authority for the latest regulations.
Written by
Jeffrey Smit
Founder & CEO of KitchenNmbrs
Jeffrey Smit built KitchenNmbrs from 8 years of hands-on experience as kitchen manager at 1NUL8 Group in Rotterdam. His mission: give every restaurant owner control over food cost.
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