I'll admit something that might surprise you - those tiny temperature labels on your delivery packages are quietly eating away at your profits. Most restaurant owners completely overlook these costs, assuming they're too small to matter. But at €0.25 per label across hundreds of monthly deliveries, you're looking at thousands in annual costs that should be passed on to customers.
What are external package label costs?
External package labels are specialized stickers or tags required for chilled delivery operations. They typically contain temperature indicators, expiration dates, and tracking codes. These labels range from €0.15 to €0.45 per unit, with pricing dependent on label type and 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 slip through the cracks
Most entrepreneurs dismiss package labels as 'minor expenses' and skip including them in cost calculations. That's a costly oversight. With 800 monthly deliveries, you're hemorrhaging €2,400 annually. And if you're not recovering these costs? They're coming straight from your bottom line.
⚠️ 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 measure the margin impact?
The calculation is straightforward: divide label costs by your average order value excluding VAT. This percentage shows exactly how much these costs are devouring your margins.
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 strategies for recovering label costs
You've got several options for incorporating label costs into your pricing structure:
- Option 1: Fixed surcharge per order (€0.50 'packaging costs')
- Option 2: Percentage markup on all delivery dishes (1-2%)
- Option 3: Raise your minimum order threshold to absorb costs
Which approach delivers results?
For smaller operations, option 1 (fixed surcharge) typically performs best. After managing kitchen operations for nearly a decade, I've seen this approach work because it's transparent and completely covers your expenses. Most delivery restaurants charge €0.50 to €1.50 in 'packaging costs' which encompasses label expenses.
? 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 management system
Categorize label costs as 'indirect packaging expenses' in your bookkeeping. In tools like KitchenNmbrs, you can set this up as a standard cost item that automatically factors into your margin calculations.
The key is consistency - don't let these costs slip by unnoticed. Track them religiously and pass them along, or watch your profits slowly vanish.
Related articles
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
Track your label usage weekly for the next 6 weeks to identify waste patterns - restaurants typically reduce label costs by 15-20% just by eliminating double-labeling on small orders.
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?
Do I have to pay VAT on packaging costs that I pass on?
What if customers complain about extra packaging costs?
Can I use cheaper labels to save costs?
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
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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