Inflation eats into your profit without you noticing. Your suppliers raise their prices, but you don't adjust your menu. After a year you're earning less on each dish, while your restaurant stays just as busy.
What does inflation do to your profit margin?
Inflation makes everything cost more. Your suppliers bump up their prices, but many restaurant owners forget to raise their own prices too. The result: your food cost jumps from, say, 30% to 35% without you realizing it.
? Example:
Your pasta carbonara cost last year:
- Ingredients: €7.50
- Selling price: €22.00 (excl. VAT: €20.18)
- Food cost: 37.2%
After 8% inflation on ingredients:
- Ingredients: €8.10
- Selling price: still €22.00 (excl. VAT: €20.18)
- Food cost: 40.1%
You lose 2.9 percentage points margin per dish!
Calculate your inflation loss per dish
For each dish you can figure out exactly how much inflation costs you. You need: the old ingredient costs, the inflation percentage and your current selling price.
Formula new food cost:
New food cost % = (Old ingredient costs × (1 + inflation%)) / Selling price excl. VAT × 100
? Calculation example:
Steak with 12% inflation on meat:
- Old ingredient costs: €12.00
- New ingredient costs: €12.00 × 1.12 = €13.44
- Selling price: €42.00 excl. VAT = €38.53
- New food cost: €13.44 / €38.53 × 100 = 34.9%
Was: 31.1% → Now: 34.9% = 3.8 percentage point loss!
Calculate the impact on an annual basis
You see the real damage when you calculate what this costs per year. Multiply the margin loss by your total turnover.
Formula annual loss:
Annual loss = (Percentage point loss / 100) × Annual turnover
? Impact on annual basis:
Restaurant with €400,000 annual turnover:
- Average margin loss from inflation: 3 percentage points
- Annual loss: 0.03 × €400,000 = €12,000
Inflation costs you €12,000 per year if you do nothing!
⚠️ Note:
Inflation compounds. After two years of 8% inflation your ingredients have become 16.6% more expensive, not 16%. So calculate: 1.08 × 1.08 = 1.166 = 16.6% increase.
What selling price do you need?
To keep your margin intact, you need to raise your selling price. First calculate how much your ingredients cost now, then work out the new minimum selling price.
Formula new selling price:
New selling price excl. VAT = New ingredient costs / (Desired food cost% / 100)
? Calculate price adjustment:
Pasta that should stay at 30% food cost:
- New ingredient costs: €8.10
- Desired food cost: 30%
- New selling price excl. VAT: €8.10 / 0.30 = €27.00
- New menu price: €27.00 × 1.09 = €29.43
From €24.00 to €29.43 = €5.43 increase needed
Check your top dishes first
You don't need to recalculate your entire menu at once. Focus on your best-selling dishes - they determine 80% of your profit. From tracking this across dozens of restaurants, the top 10 dishes usually account for most of the margin erosion.
- List your 10 best-selling dishes
- Calculate the new food cost for each dish after inflation
- Check which dishes exceed your desired food cost
- Calculate the new selling price for those dishes
- Plan phased price increases (not all at once)
⚠️ Note:
Don't raise all prices at once by 10%. Customers get spooked by big jumps. Raise gradually: first your most expensive dishes, then the rest. Spread it over 2-3 months.
Track inflation structurally
Inflation doesn't stop after this year. Make it routine to check your food cost every quarter and adjust your prices where needed.
With a system like KitchenNmbrs you can see directly which dishes become too expensive and adjust quickly without having to calculate manually.
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How do you calculate inflation impact? (step by step)
Gather your current data
Note for your 5 best-selling dishes: the current ingredient costs, the selling price and the current food cost percentage. These are your reference figures.
Calculate new ingredient costs
Multiply your current ingredient costs by (1 + inflation percentage). At 8% inflation: €10.00 × 1.08 = €10.80 new costs per dish.
Calculate new food cost percentage
Divide the new ingredient costs by your current selling price (excl. VAT) and multiply by 100. This shows how much your margin has dropped.
Calculate required price increase
Divide the new ingredient costs by your desired food cost percentage. Multiply by 1.09 for the new menu price including 9% VAT.
✨ Pro tip
Calculate inflation impact on your 5 highest-volume dishes every 90 days - these usually drive 60-70% of your total food cost variance. Small changes here create the biggest profit swings.
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 often should I adjust my prices for inflation?
Can I raise all prices at once?
What if my competitors don't raise their prices?
How do I explain price increases to customers?
Do I need to account for inflation on all ingredients?
What if I've already raised my prices recently?
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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