A local office orders 30 lunch boxes every Tuesday for six months - sounds like guaranteed revenue, but the margin calculation isn't straightforward. Contract delivery differs from restaurant sales because you're trading platform fees for direct delivery costs. Packaging, fuel, and contract risks all impact your bottom line.
Why contract delivery is different
Contract delivery creates a unique cost structure compared to platform orders. You eliminate third-party commissions but inherit new expenses:
- Direct delivery costs (fuel, time, vehicle maintenance)
- Packaging expenses (containers, bags, utensils)
- No-show and cancellation risks
- Inventory commitments with guaranteed volumes
The cost structure for contract delivery
Your complete cost price breaks down into five essential components:
💡 Example cost structure:
Weekly contract 20 lunch boxes at €12.50:
- Ingredients: €4.20 per box (33.6% of €12.50)
- Packaging: €0.85 per box
- Delivery costs: €0.75 per box (€15 per trip divided by 20)
- Preparation labor: €1.50 per box
- Overhead: €1.20 per box
Total cost price: €8.50 per box
Margin: €12.50 - €8.50 = €4.00 (32%)
Calculate your delivery costs realistically
Delivery expenses get underestimated more than any other cost component. Build your calculation around:
- Fuel: €0.25 per kilometer
- Driver wages: €15-20 per hour
- Vehicle depreciation: €0.15 per kilometer
- Insurance and registration: proportional annual costs
⚠️ Note:
Calculate delivery costs per trip, then divide by total boxes delivered. Twenty boxes in one delivery means splitting trip costs 20 ways.
Calculate packaging costs accurately
Packaging expenses accumulate faster than most operators realize - it's the kind of thing you only learn after closing your first month at a loss:
💡 Packaging costs example:
- Cardboard lunch container: €0.45
- Plastic lid: €0.15
- Paper bag: €0.12
- Wooden utensil set: €0.08
- Napkin: €0.03
- Brand sticker: €0.02
Total packaging: €0.85 per box
Price in contract risks
Contracts introduce specific risks that require margin protection:
- No-show buffer: 2-5% margin cushion for missed deliveries
- Ingredient inflation: price volatility over contract duration
- Volume shortfalls: customer ordering below guaranteed minimums
Minimum margin for contract delivery
Contract delivery demands different margin targets than dine-in service:
💡 Margin distribution contract delivery:
- Ingredients: 28-35% of selling price
- Packaging + delivery: 8-12%
- Labor: 25-30%
- Overhead: 15-20%
- Profit: minimum 15-20%
Total: 100% of selling price
Food cost calculators like KitchenNmbrs track these cost components per recipe and calculate margins automatically, including packaging and delivery expenses.
How do you calculate the margin on contract delivery? (step by step)
Calculate your total ingredient costs per portion
Add up all ingredients including garnish, sauces and oil. Calculate with your actual purchase prices and account for cutting loss. This forms your food cost basis.
Add packaging and delivery costs
Calculate exactly what each box, lid, bag and cutlery costs. Divide your delivery costs (fuel + time) by the number of boxes per trip. These are your direct extra costs.
Calculate labor and overhead costs
Calculate how much time preparation takes and multiply by your kitchen hourly rate. Add overhead (15-20% of selling price). Now you have your total cost price.
Determine your desired profit margin
For contract delivery you aim for minimum 15-20% net profit. Subtract all costs from your selling price. Is there less than 15% left? Then your price needs to go up.
✨ Pro tip
Track your actual delivery costs every two weeks by logging exact mileage and delivery time per route. Most operators underestimate these expenses by 4-7% initially, which erodes margins faster than ingredient cost fluctuations.
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
What's a realistic profit margin for contract delivery versus restaurant sales?
Contract delivery typically yields 15-20% net profit compared to 25-35% for restaurant sales. You eliminate service staff costs but add packaging and delivery expenses. The trade-off usually favors contracts due to guaranteed volume and no platform commissions.
How do I handle delivery costs when visiting multiple contract customers in one trip?
Calculate your total route costs (time, fuel, vehicle wear) and divide by the combined box count across all stops. If you deliver 15 boxes to office A, 25 to office B, and 10 to office C, divide your €30 trip cost by 50 total boxes for €0.60 per box delivery cost.
Should I build price adjustment clauses into long-term delivery contracts?
Yes, especially for contracts exceeding six months. Include quarterly ingredient cost reviews or tie pricing to food inflation indexes. Many operators lose 3-8% margin annually on fixed-price contracts without adjustment mechanisms.
📚 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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