Studies show that 20% of menu items typically account for 80% of restaurant profits. Many entrepreneurs keep dishes on the menu 'because they've always been there', while secretly losing money. You'll discover exactly how to calculate what removing such a product means for your profit.
Why underperforming products eat into your profit
A dish that sells poorly and has a low margin costs you money in two ways. First, you lose money on every sale. Second, the ingredients sit rotting in your cooler.
⚠️ Heads up:
Many entrepreneurs only look at revenue per dish. But a dish that does €500 per month in revenue with 45% food cost delivers less than a dish with €300 revenue and 25% food cost.
Step 1: Analyze your current situation
Before you remove anything, you need to know what it's costing you now. Grab your sales data from the last 3 months and examine:
- How many times sold per month
- Total revenue from this dish
- Food cost percentage
- How much ingredients you throw away (waste)
💡 Example:
Lamb stew on your menu for €24.50 (incl. 9% VAT):
- Sold: 12x per month
- Revenue: €294 per month
- Food cost: 42% (€8.50 ingredients on €20.18 excl. VAT)
- Waste: €25 per month (lamb that goes past its date)
Actual margin: €294 - €102 (food cost) - €25 (waste) = €167 gross
Step 2: Calculate what disappears
If you remove this dish, you lose two things: the revenue and the costs. The net effect is what remains.
Formula:
Net effect = Revenue - Food cost - Waste - Labor time
Also factor in how much time your chef spends preparing it. For complicated dishes that don't sell much, this adds up quickly. This represents one of the most common blind spots in kitchen management - underestimating the true labor cost of low-volume, complex preparations.
💡 Example calculation:
Lamb stew removed:
- Revenue lost: -€294
- Food cost saved: +€102
- Waste saved: +€25
- Labor time saved: +€40 (2 hours prep per month)
Net effect: -€294 + €167 = -€127 per month
Conclusion: This dish still brings in €127 per month. Removing it costs money.
Step 3: Look at alternatives
Maybe the dish doesn't have to go completely. Sometimes you can improve the margin by:
- Raising the price (test €27.50 instead of €24.50)
- Buying cheaper (different supplier, different cut)
- Reducing portion size (200g instead of 250g lamb)
- Offering only on weekends (less waste)
💡 Alternative example:
Raise price to €27.50:
- New price excl. VAT: €25.23
- New food cost: 33.7% (€8.50 / €25.23)
- Extra margin per portion: €3.05
- At 10 sales per month: +€30.50 extra profit
If you lose 2 customers from the price increase, you still make more money.
What if you remove it anyway?
Sometimes removing is the right option. For example if:
- The total contribution is negative
- It takes a lot of time to prepare
- Your cooler is full of ingredients you can't get rid of
- Your menu is too big and guests get lost in the choices
Make sure you fill the freed-up space with a more profitable alternative.
How do you calculate the effect of removing a product?
Gather the product's data
Note how many times it sells per month, total revenue, food cost percentage and estimated waste. Grab at least 3 months of data for a reliable picture.
Calculate all costs that disappear
Add up: food cost + waste + labor time for preparation. These are your savings if the product comes off the menu.
Subtract costs from revenue
Formula: Net effect = Lost revenue - Saved costs. Is the number positive? Then you're losing money. Is it negative? Then you're making money by removing it.
✨ Pro tip
Track your bottom 5 dishes for exactly 30 days, measuring both direct losses and prep time. You'll often find that removing just 2 unprofitable items frees up 4-6 hours of kitchen labor weekly.
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
Should I also include fixed costs in this calculation?
No, fixed costs (rent, insurance) you pay anyway. Focus on the variable costs that really disappear: ingredients, waste and direct labor time.
What if customers come specifically for this dish?
Then you might lose more revenue than just this dish. Try alternatives first like seasonal offerings or daily specials, before removing it completely.
How often should I analyze my menu for underperformers?
Check your 3 worst-selling dishes every quarter. Look at sales numbers, margins and waste. This prevents loss-making products from eating into your profit for months.
Can a dish with high food cost still be profitable?
Yes, if it sells often and produces little waste. A pasta with 35% food cost that sells 200 times per month delivers more than a dish with 25% food cost that sells 10 times.
Should I warn customers if I remove a dish?
For popular dishes, yes. Announce it a week ahead as 'last chance'. For dishes that barely sell, you can quietly remove them.
What about dishes that use expensive specialty ingredients?
Calculate the true cost including waste from unused portions. A €30 truffle dish that wastes €15 in ingredients monthly might be less profitable than simpler options.
How do I account for dishes that boost sales of other items?
Track combo sales over 30 days. If removing a starter reduces wine sales by €200 monthly, factor that loss into your calculation before deciding.
📚 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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