A dish that's priced too low eats into your profit. Many restaurant owners estimate their prices, which means they unknowingly lose money on popular d...
Picture this: your most popular pasta dish brings in €200 daily, but you're actually losing €3 on every plate. This happens more often than you'd think because many restaurant owners estimate their dish prices rather than calculating them precisely. You can spot underpriced dishes by checking your food cost percentage against industry benchmarks.
Check your food cost percentage
The quickest way to spot an underpriced dish is calculating your food cost percentage. This shows you what portion of your selling price goes toward ingredients.
Formula: Food cost % = (Ingredient costs / Selling price excl. VAT) × 100
💡 Example:
You sell a pasta carbonara for €18.50 (incl. 9% VAT).
- Selling price excl. VAT: €18.50 / 1.09 = €16.97
- Ingredient costs: €6.20
- Food cost: (€6.20 / €16.97) × 100 = 36.5%
This exceeds the recommended 33% threshold for most restaurants.
Standard food cost percentages
Different restaurant types operate within specific food cost ranges:
- Fine dining: 28-35%
- Casual dining/bistro: 25-32%
- Pizzeria: 20-28%
- Café food: 25-35%
- Delivery: 28-35%
⚠️ Note:
Always calculate using the price EXCLUDING VAT. Your menu shows prices including VAT, which is 9% for hospitality.
Calculate your minimum selling price
If your food cost runs too high, you can determine the minimum price needed for profitability.
Formula: Minimum price excl. VAT = Ingredient costs / (Desired food cost % / 100)
💡 Example:
Your steak costs €12.50 in ingredients. You want 30% food cost.
- Minimum price excl. VAT: €12.50 / 0.30 = €41.67
- Price incl. 9% VAT: €41.67 × 1.09 = €45.42
You need to charge at least €45.40 to achieve 30% food cost.
Watch out for hidden costs
Restaurant owners frequently overlook these costs, pushing their actual food cost higher than expected:
- Garnish: The parsley, lemon slice, side salad
- Sauces: Mayonnaise, ketchup, dressing
- Bread: Complimentary rolls or side bread
- Oil and butter: For cooking and plating
- Trimming loss: Fish and meat yield only 50-85% usable product
💡 Example of trimming loss:
You buy whole salmon for €18.00/kg. After filleting you have 60% fillet left.
- Actual fillet price: €18.00 / 0.60 = €30.00/kg
- NOT: €18.00 × 0.60 = €10.80/kg (this is wrong!)
So you're paying €30/kg for the fillet, not €18/kg.
Check your best-selling dishes first
Don't overwhelm yourself by analyzing every menu item at once. Focus on your top 5 sellers first.
These dishes drive the majority of your revenue and profit. From tracking this across dozens of restaurants, fixing pricing on your bestsellers typically resolves 80% of food cost issues. You can address the remaining dishes later.
⚠️ Note:
Review your prices regularly. Suppliers frequently increase prices without advance notice. What was profitable last month might now be losing money.
What if raising your price is difficult?
Sometimes price increases aren't feasible due to competition or customer expectations. You have several alternatives:
- Reduce portions: 200g steak instead of 250g
- Cheaper ingredients: Different cut of meat or alternative supplier
- Adjust garnish: Less expensive side dishes
- Menu engineering: Feature profitable dishes more prominently
Food cost calculators automatically track your cost per dish and alert you to supplier price changes, allowing immediate adjustments.
How do you check if a dish is priced too low? (step by step)
Add up all ingredient costs
Make a list of all ingredients for one portion. Also include garnish, sauces, oil and butter. Don't forget trimming loss with fish and meat.
Calculate your selling price excl. VAT
Divide your menu price by 1.09 to get the price excl. VAT. For hospitality, VAT is 9%. For example: €24.00 / 1.09 = €22.02 excl. VAT.
Calculate your food cost percentage
Divide your ingredient costs by your selling price excl. VAT and multiply by 100. If you're above 35%, your dish is probably priced too low.
✨ Pro tip
Calculate food cost on dishes that customers order with modifications first. A burger with extra bacon and cheese might seem profitable at base price, but additions often push it into loss territory within 48 hours of launch.
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
What is a good food cost for restaurants?
For most restaurants, a healthy food cost ranges between 28% and 35%. Fine dining can run slightly higher (up to 35%), while pizzerias often achieve lower percentages (20-28%). These serve as guidelines rather than absolute rules.
Should I include VAT in my cost price calculation?
No, always calculate using the selling price EXCLUDING VAT. For hospitality, that's 9%. Divide your menu price by 1.09 to get the price excl. VAT.
How often should I check my food cost?
Review your 5 best-selling dishes monthly. Suppliers regularly increase prices, which can inflate your food cost without warning. Check seasonal products more frequently due to price volatility.
What if my food cost is too high but I can't raise my price?
You can reduce portions, source cheaper ingredients, or replace expensive garnishes. Menu engineering also helps by positioning profitable dishes more prominently to drive sales.
What costs do business owners often forget?
Garnish, sauces, bread, cooking oil, butter for plating, and trimming loss get overlooked frequently. Fish typically yields 50-60% usable product, while meat yields 75-85%. This makes your actual ingredient cost higher than the purchase price suggests.
Can I estimate food cost without calculating?
Estimating proves unreliable and costly. A 5 percentage point error can cost you €25,000 annually on €500,000 turnover. Precise calculation prevents unknowingly losing money on popular dishes.
📚 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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