Baking Third-Party Delivery Fees into Recipe Costs

Food delivery costs are an unavoidable expense for most restaurants today.

Fees from these third-party delivery services are the first that come to mind. Other delivery costs vary based on dish and concept, including containers and utensils, elusive ketchup packets, potential labor adjustments, and more.

Even as the dine-in experience comes roaring back, increased delivery (and takeout) costs are here to stay. It’s essential that you implement a system to monitor third-party delivery service fees and manage your margins across dishes and service types.

Keep reading to see how xtraCHEF by Toast empowers you to take control of your costs at the recipe level, factoring in food delivery, takeout, and product price fluctuations.

Surfing volatility with consistent plate cost management

The first step of monitoring the impact of third-party delivery fees is having a handle on your operating costs.

While most operators know their prime costs (combined costs of goods sold (COGS) & labor costs), managing plate costs is a more precise and refined metric to truly understand the impact of delivery.

Calculating plate costs is a “journey not destination” objective. It’s not enough to cost out your recipes when you first open/reopen. Even annually, quarterly, and monthly won’t cut it. It’s a perpetual task to optimize profitability.

Consistently managing plate costs is so important because you’re accounting for volatility:

• Supply chain disruptions and subsequent vendor price fluctuations
• Trends, seasonality, and changing consumer preferences
• New means of service, including outdoor dining, meal kits, supper clubs, etc.
• Labor struggles and growing wage demands
• The rise of takeout and food delivery and the associated costs

With a constant grasp on how margins are impacted day-to-day, you can make more intentional, data-driven decisions.

Managing third-party delivery services with plate and recipe management from xtraCHEF by Toast

Profitability is produced plate by plate. No one on your team has the time to manually calculate plate costs given all the daily fluctuations.

That’s where recipe management software comes in. It’s essential to accurately monitor plate costs. xtraCHEF by Toast’s recipe management tool empowers you to build dishes by dragging and dropping products into the recipe at hand.

You designate the amount of each product, and we pull in the corresponding pricing information from the most recent invoice.

You can go a step further and add additional costs and variables on top of that, applying delivery fees at a global level and also designating added costs for takeout containers, bags, plastic cutlery, etc.

Set recipes. Add the variables. And then monitor profitability and cost fluctuations as different waves of volatility crash all around.

Get your xtraCHEF reporting GBD with a Toast integration

Our Toast integration allows users of both platforms to inject Product Mix (PMix) data from Toast into xtraCHEF. Users can rectify their projected costs and margins in xtraCHEF with real sales data from Toast, creating golden, brown, delicious, and precise metrics.

For example, you sell personal pizzas for $12, so you factor costs for that item with that price in mind. But after a kitchen mistake, a refund for an ornery customer, and a comp for your favorite regular, you’ve got $36 in discounts on the week. The combination of our platforms accounts for this change, adjusting costing metrics to reflect these inevitable variables.

With the Product Mix Reporting via our Toast integration, you’re able to factor in discounts, comps, waste, remakes, and other added costs that show your true average sales price, giving you a more accurate margin and net sales.

The same is true with different delivery methods. You can set delivery fees in xtraCHEF for multiple third-party providers. The PMix data from Toast shows which orders were sold through with delivery providers, and our platform automatically adjusts the numbers to account for the corresponding fees and associated costs of delivery/takeout materials.

xtraCHEF by Toast offers a precise, refined lens through which to view the operational and financial health of your restaurant

You’ve seen the capabilities and benefits of our platform sprinkled throughout this article.

It automates tedious tasks while analyzing data and informing you about the numbers that define your business.

It measures how efficiently you are recouping the money being put into the business in the face of food delivery costs and other impactful expenses.

And it helps you make the right decisions to achieve your restaurant goals, be it multiple locations, paying off investors, or simply thriving at your spot.

When you’re ready, let’s schedule a demo so we can show you what it looks like in action.