Fixed costs like rent, energy, and insurance must be included in your selling prices, otherwise you're working for nothing. Many hospitality entrepreneurs forget to pass on these costs and only calculate with ingredients. The result: you think you're making profit, but at the end of the month there's nothing left.
Why fixed costs are crucial
Your food cost might be perfectly at 30%, but if your fixed costs eat up 50% of your revenue, you're left with only 20% for staff, depreciation, and profit. That's too little to run a healthy business.
⚠️ Note:
Fixed costs keep running, even if you don't have a single guest. You need to recoup these costs through your selling prices.
Which fixed costs do you include?
All costs that keep running, regardless of how much you sell:
- Rent: including service charges
- Energy: gas, water, electricity (fixed portion)
- Insurance: liability, inventory, building
- Phone/internet: fixed subscriptions
- Depreciation: kitchen equipment, furniture
- Accountant/administration: fixed costs
- Licenses: hospitality, music, terrace
Calculate your fixed costs per month
Some costs you pay quarterly or annually. Convert everything to monthly costs for a clear overview.
💡 Example bistro (50 seats):
- Rent: €3,500/month
- Energy: €800/month
- Insurance: €200/month
- Internet/phone: €150/month
- Depreciation: €600/month
- Other: €250/month
Total fixed costs: €5,500/month
From monthly costs to cost per cover
Divide your monthly fixed costs by the number of covers you expect. This gives you the fixed costs per guest.
💡 Calculation:
Fixed costs: €5,500/month
Expected covers: 1,100/month (25 open days, 44 covers/day average)
Fixed costs per cover: €5,500 ÷ 1,100 = €5.00
This means each dish must contribute at least €5.00 to your fixed costs, on top of ingredient costs and labor costs.
Calculate markup percentage
Instead of per cover, you can also calculate a percentage markup. You do this by dividing your fixed costs by your expected revenue.
💡 Percentage calculation:
Fixed costs: €5,500/month
Expected revenue: €22,000/month
Fixed costs percentage: €5,500 ÷ €22,000 = 25%
Your fixed costs are thus 25% of your revenue. Add this percentage to your food cost and labor costs to determine your total cost price.
Practical application in pricing
Use the fixed costs per cover or the percentage to determine your minimum selling prices.
💡 Pasta price calculation:
- Ingredients: €4.50
- Share of fixed costs: €5.00
- Labor (30% of revenue): €6.00
- Profit (10%): €2.00
Minimum selling price excl. VAT: €17.50
Menu price incl. 9% VAT: €19.08
⚠️ Note:
If you do fewer covers than expected, your fixed costs per cover become higher. Check monthly whether you're on track.
Account for seasonal fluctuations
Hospitality often has quiet and busy periods. Calculate your fixed costs based on your slowest month, not your best. That way you know for sure you're always working at cost.
In busy periods you earn extra, which helps you get through slow periods. A system like KitchenNmbrs helps you keep these calculations up to date automatically and adjust quickly if your costs or expectations change.
How do you calculate fixed costs in your selling prices? (step by step)
Inventory all fixed costs
Make a list of all costs that keep running regardless of your revenue: rent, energy, insurance, phone, depreciation, and licenses. Convert annual costs to monthly costs by dividing by 12.
Calculate expected covers per month
Count how many guests you expect on average per day, multiply by your opening days per week and then by 4.3 (average weeks per month). Use your slowest month as the starting point, not your best.
Divide fixed costs by covers
Divide your total monthly fixed costs by the expected number of covers. This amount must be contributed by each dish at minimum to your fixed costs, on top of ingredients and labor.
✨ Pro tip
Calculate your fixed costs based on your worst month, not your best. That way you know for sure you're always working at cost and you automatically build a buffer for slow periods.
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 include VAT in the calculation of fixed costs?
No, always calculate excluding VAT. Your fixed costs are usually including VAT, but for price calculation you add everything up and only add the VAT at the end (9% for food).
What if I do more or fewer covers than expected?
Check your actual covers versus expectations monthly. If you consistently do fewer, your fixed costs per cover become higher and you need to adjust your prices or attract more guests.
How often should I recalculate my fixed costs?
At least quarterly or if there are major changes (rent increase, new insurance). Energy costs can fluctuate monthly, so keep a close eye on those.
Can I distribute fixed costs differently across my menu?
Yes, you can add more markup on popular dishes and less on slow-movers. But make sure your total works out, otherwise you're subsidizing dishes with each other.
What if my fixed costs are higher than 30% of my revenue?
Then you have a problem. Healthy hospitality has fixed costs between 20-30% of revenue. Above 30% it becomes difficult to be profitable. Consider cost reduction or revenue increase.
📚 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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