Most restaurant owners fear raising prices will kill their sales. But smart operators know there's a sweet spot where fewer customers actually means more profit. The math behind this balance is simpler than you think.
What is the break-even point?
The break-even point is where your extra margin per dish beats the loss in volume sold. You're selling less, but earning more per unit — and your bottom line grows. One of the most common blind spots in kitchen management is assuming higher prices always hurt profits.
💡 Example:
You currently sell 100 pastas per week for €18.00 (excl. VAT: €16.51):
- Ingredient costs: €5.00 per portion
- Margin per portion: €16.51 - €5.00 = €11.51
- Total profit: 100 × €11.51 = €1,151
At €20.00 (excl. VAT: €18.35) you sell 85 pastas:
- Margin per portion: €18.35 - €5.00 = €13.35
- Total profit: 85 × €13.35 = €1,135
Result: €16 less profit despite higher price
The formula for the break-even point
To calculate the break-even point, use this formula:
Minimum volume retention % = (Current margin / New margin) × 100
If your current volume multiplied by this percentage generates more than your current situation, the price increase pays off.
💡 Calculation:
Current situation: €16.51 - €5.00 = €11.51 margin
New situation: €18.35 - €5.00 = €13.35 margin
Minimum retention: (€11.51 / €13.35) × 100 = 86.2%
You can lose a maximum of 13.8% volume to break even
Estimating elasticity
But how much volume will you actually lose with a price increase? This is called price elasticity. For restaurants:
- Low elasticity (5-15% loss): Unique location, little competition, loyal customers
- Average elasticity (15-25% loss): Normal competition, mixed customer base
- High elasticity (25%+ loss): Lots of competition, price-sensitive customers
⚠️ Note:
Test price increases on a small part of your menu first. Watch the reaction before you adjust everything.
Practical application
Start with your signature dishes. These often have the lowest elasticity because guests come specifically for them. Calculate for each dish:
- Current margin per portion
- New margin at higher price
- Maximum allowed volume loss
- Expected volume loss based on competition
💡 Example decision:
Your signature burger (50 per week, €12.00 → €13.50):
- Current margin: €7.50
- New margin: €9.00
- Maximum loss: 16.7%
- Expected loss: 10% (few alternatives)
Conclusion: Price increase is profitable
Food cost calculators and price optimization
Tools like KitchenNmbrs immediately show the impact of price changes on your food cost and margin. The app automatically calculates your new profitability per dish, so you can make data-driven decisions about price adjustments.
How do you calculate the break-even point? (step by step)
Calculate your current margin per dish
Subtract your total ingredient costs from your selling price (excl. VAT). This is your current margin per portion. Also note how many portions you currently sell per week.
Determine your new margin at higher price
Calculate your new selling price excl. VAT and subtract the ingredient costs again. This gives you the new, higher margin per portion.
Calculate the maximum volume loss
Divide your current margin by your new margin and multiply by 100. The remaining percentage is how much volume you can lose at most to break even.
Estimate your actual volume loss
Look at your competition, customer loyalty, and uniqueness of the dish. With few alternatives you lose less volume than with lots of competition.
Make the comparison
If your expected volume loss is lower than your maximum allowed loss, the price increase is profitable. Test first with one dish before you adjust more.
✨ Pro tip
Test your break-even calculations on 2-3 dishes over a 30-day period before rolling out wider changes. Track daily sales volume to catch negative trends within the first week.
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
How much volume can I lose at most with a price increase?
This depends on your margins. Use the formula: (current margin / new margin) × 100. The remaining percentage is your maximum allowed volume loss to break even.
Which dishes should I raise prices on first?
Start with your signature dishes and best-selling items. These often have the lowest price elasticity because guests come specifically for them.
What if I lose too much volume after a price increase?
Go back to your old price or try a smaller increase. Sometimes it helps to add extra value like larger portions or better ingredients instead of just raising the price.
📚 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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