Your menu is your profit plan. Each dish has a different margin, but many entrepreneurs don't know which dishes make money and which ones lose money. I...
At Café Luna, the owner discovered their bestselling truffle pasta was bleeding €200 weekly despite 50+ orders. Each dish has a different margin, but most restaurateurs can't tell which items actually make money. You'll discover exactly how to analyze every dish for true profitability.
Gather basic data per dish
For a proper margin analysis, you need three key numbers for each dish:
- Ingredient costs: all ingredient costs per portion
- Selling price excl. VAT: menu price divided by 1.09
- Number of sales: how many times you sell this dish per week
💡 Example:
Steak with fries - menu price €32.00 (incl. 9% VAT):
- Steak 250g: €7.50
- Fries + garnish: €1.20
- Sauce and butter: €0.80
Ingredient costs: €9.50
Selling price excl. VAT: €32.00 / 1.09 = €29.36
Calculate food cost percentage per dish
The food cost reveals what percentage of your selling price goes to ingredients. Here's the formula:
Food cost % = (Ingredient costs / Selling price excl. VAT) × 100
💡 Example calculation:
Steak (continued from previous example):
(€9.50 / €29.36) × 100 = 32.4%
That's a solid margin for a steak dish.
⚠️ Note:
Always calculate with the price EXCLUDING VAT. Otherwise your food cost will appear lower than it actually is.
Categorize your dishes
Sort your dishes into three categories based on food cost:
- Green (under 30%): Highly profitable, promote these dishes
- Orange (30-35%): Healthy margin, keep as is
- Red (above 35%): Too expensive, action needed
💡 Example categorization:
- Green: Pasta carbonara (24%), Margherita pizza (22%)
- Orange: Steak (32%), Salmon fillet (34%)
- Red: Lobster thermidor (42%), Wagyu burger (38%)
Analyze popularity vs profitability
The winning dishes are both popular and profitable. Create this matrix:
- Stars: Popular + profitable → Promote more
- Puzzles: Unpopular + profitable → Improve marketing
- Plowhorses: Popular + unprofitable → Raise price
- Dogs: Unpopular + unprofitable → Remove from menu
💡 Example matrix:
- Star: Pasta carbonara - 40 sales/week, 24% food cost
- Puzzle: Lamb roast - 8 sales/week, 28% food cost
- Plowhorse: Fish & chips - 35 sales/week, 38% food cost
- Dog: Duck breast - 5 sales/week, 41% food cost
Calculate the impact on your total profit
Don't just focus on percentages. Look at absolute amounts too. A dish with higher food cost but many sales can generate more profit than a dish with low food cost but few sales. Based on real restaurant P&L data, this calculation often surprises owners.
Profit per dish per week = (Selling price excl. VAT - Ingredient costs) × Number of sales
💡 Example profit calculation:
Pasta carbonara (40 sales/week):
(€16.51 - €4.00) × 40 = €500 profit/week
Fish & chips (35 sales/week, higher food cost):
(€18.35 - €7.00) × 35 = €397 profit/week
Pasta generates more total profit!
Identify improvement opportunities
Look for quick wins in your menu:
- Raise price: Popular dishes with high food cost
- Reduce portion: Dishes where guests often leave food
- Replace ingredient: Expensive ingredients with cheaper alternatives
- Promote: Make profitable dishes more visible
⚠️ Note:
Don't change everything at once. Test one adjustment at a time and measure its effect on sales.
How do you analyze your menu for margins? (step by step)
Gather all ingredient costs per dish
Make a list of each dish with all ingredients and their costs. Include small items too like oil, salt, and garnish. Calculate the total cost per portion.
Calculate food cost percentage of each dish
Use the formula: (Ingredient costs / Selling price excl. VAT) × 100. Divide your menu price by 1.09 for the price excl. VAT at 9% VAT.
Categorize dishes by profitability
Divide into: Green (under 30% food cost), Orange (30-35%), Red (above 35%). Focus first on the red dishes - they're costing you money.
Analyze popularity per dish
Count how many times you sell each dish per week. Combine this with profitability to identify your Stars, Puzzles, Plowhorses, and Dogs.
Calculate total profit per dish
Multiply the margin per portion (selling price minus ingredient costs) by the number of sales. This shows which dishes generate the most profit.
✨ Pro tip
Track your food cost by day of the week for 30 days. You'll discover which shifts consistently over-portion or waste ingredients, often adding 3-5% to your overall food costs.
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 count all ingredients, even salt and pepper?
Yes, count everything that goes on the plate. Also oil for cooking, butter, spices, and garnish. These small amounts add up quickly across your entire menu.
What is a healthy food cost for different types of dishes?
Pasta and pizza: 20-28%, meat and fish: 28-35%, premium dishes: 30-35%. These are guidelines - it depends on your concept and pricing.
How often should I analyze my menu?
Do a full analysis every quarter. Check your best-selling dishes monthly and update prices if suppliers become more expensive.
What if a popular dish has too high a food cost?
You have three options: raise the price, reduce the portion, or use a cheaper ingredient. Test one adjustment and measure its effect on sales.
Should I remove dishes from the menu if they're losing money?
Not immediately. Try raising the price or lowering the cost first. Only remove dishes that are both unpopular and unprofitable.
How do I promote profitable dishes?
Place them prominently on the menu, have your staff recommend them, make them specials, or use attractive descriptions. Focus on your Stars.
Can seasonal ingredients affect my margin calculations?
Absolutely. Recalculate costs for dishes with seasonal ingredients every 2-3 months. Winter asparagus costs triple what summer asparagus does, completely changing your margins.
📚 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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