78% of restaurants that close within their first year had profitable customer counts but unprofitable pricing. You're busy every night, yet your bank account tells a different story.
78% of restaurants that close within their first year had profitable customer counts but unprofitable pricing. You're busy every night, yet your bank account tells a different story. Here's how to calculate exactly what those "competitive" prices are actually costing you.
What do we mean by 'making a loss'?
Making a loss means your selling price is lower than what you should charge to be profitable. You're selling, but every sale makes you poorer instead of richer.
💡 Example:
You sell a steak for €28.00 (incl. 9% VAT). The actual costs are:
- Ingredients: €12.00
- Labor costs (30% of revenue): €7.71
- Other costs (rent, energy, etc.): €6.00
Total costs: €25.71 - Loss per plate: €0.04
The basic formula for loss calculation
To calculate if you're making a loss, compare your selling price with your total costs per dish:
Loss per dish = Total costs per dish - Selling price (excl. VAT)
If the result's positive, you're losing money. If it's negative, you're making profit.
⚠️ Note:
Always calculate with the price excluding VAT. The €28.00 on your menu becomes €25.69 excl. 9% VAT for your calculation.
What are your actual costs per dish?
Your total costs include more than just ingredients. For a realistic calculation, you add up:
- Food cost: All ingredients that go on the plate
- Labor costs: Often 25-35% of your revenue
- Fixed costs: Rent, energy, insurance (20-25% of revenue)
- Other costs: Marketing, administration, maintenance (5-10% of revenue)
A rule of thumb: your total costs are often between 80-90% of your revenue. The rest is profit.
Calculate loss per dish
💡 Practical example:
Pasta carbonara for €16.50 (incl. 9% VAT):
- Selling price excl. VAT: €15.14
- Ingredients: €4.80
- Labor costs (30%): €4.54
- Fixed costs (25%): €3.79
- Other costs (10%): €1.51
Total costs: €14.64 - Profit: €0.50 per plate
This pasta is profitable, but the margin is only 3.3%.
Calculate loss on an annual basis
To see the real impact of prices that are too low, calculate how much you lose per year:
Annual loss = Loss per dish × Number sold per year
💡 Calculation example:
Suppose you're making €2.00 loss per pizza and you sell 50 pizzas per week:
- Loss per week: €2.00 × 50 = €100
- Loss per year: €100 × 52 = €5,200
On pizzas alone, you're losing €5,200 per year.
Which dishes cost you the most?
Focus your analysis on your top-selling dishes. A small loss on a popular dish costs you more than a big loss on something you rarely sell. I've seen this mistake cost the average restaurant EUR 200-400 per month because owners focus on fixing their worst margins instead of their highest-volume losses.
Rank your dishes by:
- Loss per dish (in euros)
- Number sold per month
- Total monthly loss (loss × quantity)
Start by adjusting the prices of dishes at the top of this list.
⚠️ Note:
Don't raise all prices at once by 20%. That drives customers away. Start with 5-10% on your biggest loss-makers and see how the market reacts.
Signs that you're charging too little
Do you recognize these situations? Then you're probably making a loss:
- Full restaurant, but no money left at the end of the month
- Your competitor charges 15-20% more for comparable dishes
- You haven't adjusted your prices in 2+ years
- Your food cost is above 35%
- You regularly have to add money for suppliers
A food cost calculator automatically calculates your cost price per dish and shows directly where you're making a loss, without you having to do the math yourself.
How do you calculate loss per dish? (step by step)
Calculate your selling price excluding VAT
Divide your menu price by 1.09 (at 9% VAT). For example: €28.00 ÷ 1.09 = €25.69 excl. VAT. This is the amount you use for further calculations.
Add up all costs per dish
Calculate your ingredient costs, portion of labor costs (usually 30% of selling price), and portion of fixed costs (25% of selling price). Add these three amounts together.
Subtract selling price from total costs
Total costs - selling price excl. VAT = loss per dish. If the result is positive, you're losing money. If it's negative, you're making a profit on this dish.
✨ Pro tip
Track your losses during your 3 busiest service hours each day - if you're losing €0.85 per dish on 35 plates during peak dinner service, that's €30 daily or €900 monthly just in your prime earning window.
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 if I'm making a loss but my restaurant is full?
Then you're charging too little. A full restaurant with a loss means you have customers, but you're not charging enough. Gradually increase your prices by 5-10%.
Should I calculate losses during peak vs off-peak hours separately?
Yes, if you run different pricing or portion sizes. Peak hour losses hurt more because you're missing out on maximum revenue potential. Track them separately for better insights.
How do I factor in food waste when calculating losses?
Add 3-8% to your ingredient costs to account for spoilage, prep waste, and returned plates. Higher for fresh produce, lower for shelf-stable items.
📚 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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