A €3 price increase on your best-selling dish can add €1,100 to your annual profit. Most restaurant owners avoid raising prices because they fear customer backlash, but the financial impact is often far greater than the risk.
A €3 price increase on your best-selling dish can add €1,100 to your annual profit. Most restaurant owners avoid raising prices because they fear customer backlash, but the financial impact is often far greater than the risk.
The basics: why small price increases have big impact
Every price increase flows straight to your bottom line. With a 30% food cost, 70% of each extra euro covers fixed costs and profit. That's the multiplier effect that makes pricing so powerful.
💡 Example:
You sell a pasta for €18.50. You raise it to €20.50.
- Price increase: €2.00 excl. VAT = €1.83
- Extra ingredients: €0.00
- Extra profit per plate: €1.83
At 200 pastas per month: €366 extra profit
Step 1: Calculate your current margin per dish
You need to know what you're earning per dish before making changes. Take your selling price excluding VAT and subtract ingredient costs.
Formula:
Margin per dish = Selling price excl. VAT - Ingredient costs
💡 Example:
Steak on the menu for €32.00 incl. 9% VAT:
- Selling price excl. VAT: €32.00 / 1.09 = €29.36
- Ingredient costs: €10.50
- Current margin: €29.36 - €10.50 = €18.86
Step 2: Calculate the new margin after price increase
Subtract ingredient costs from your new selling price excluding VAT. The difference between old and new margins is your extra profit per dish.
💡 Example:
Steak raised from €32.00 to €35.00:
- New price excl. VAT: €35.00 / 1.09 = €32.11
- Ingredient costs: €10.50 (unchanged)
- New margin: €32.11 - €10.50 = €21.61
- Extra profit: €21.61 - €18.86 = €2.75 per steak
Step 3: Calculate the impact on an annual basis
Multiply your extra profit per dish by annual sales volume. This reveals the total impact on yearly profit. Based on real restaurant P&L data, most owners underestimate this figure by 40-50%.
Formula:
Extra annual profit = Extra profit per dish × Number sold per year
💡 Example:
You sell steak 8 times per week, 50 weeks per year:
- Number per year: 8 × 50 = 400 pieces
- Extra profit per piece: €2.75
- Extra annual profit: €2.75 × 400 = €1,100
€3.00 price increase = €1,100 extra profit per year
⚠️ Note:
This calculation assumes identical sales volume after the price increase. You might sell slightly less, but usually far less than you expect.
The break-even point: how many customers can you lose?
Calculate how many customers you can afford to lose before a price increase hurts profitability. This math gives you confidence to act.
Formula:
Maximum loss % = (Price increase % / (100% + Price increase %)) × 100
💡 Example:
Price increase from €32 to €35 = 9.4% increase:
- Maximum loss: 9.4% / 109.4% = 8.6%
- So you can lose 8.6% of your customers
- And still earn the same amount
Lose less than 8.6%? Then you earn more.
Which dishes to raise first?
Target your best-selling dishes first. They create the biggest impact on total profit. Focus on dishes where you're confident about quality and uniqueness.
- Popular dishes: Maximum impact on total profit
- Signature dishes: Harder to compare with competitors
- Low food cost dishes: More room for increases
⚠️ Note:
Don't raise everything simultaneously. Spread increases over 2-3 months. This prevents sticker shock from your new menu.
The impact on your food cost percentage
Price increases automatically reduce your food cost percentage. Ingredient costs remain constant while selling prices rise.
💡 Example:
Steak ingredients €10.50:
- At €32.00: food cost 35.8%
- At €35.00: food cost 32.7%
- Difference: 3.1 percentage points lower
Your food cost automatically drops through price increases
How do you calculate the impact of a price increase? (step by step)
Calculate your current margin per dish
Subtract your ingredient costs from your selling price excl. VAT. This is what you currently earn per dish before fixed costs are deducted.
Determine your new selling price
Choose a realistic price increase. Round amounts to €0.50 (for example €32.50 instead of €32.73) for a professional appearance on your menu.
Calculate the extra profit per dish
Subtract your ingredient costs from your new selling price excl. VAT. The difference from your old margin is your extra profit per dish.
Multiply by number of sales per year
Count how many times you sell this dish per week. Multiply by 50-52 weeks per year for the total impact on your annual profit.
Calculate the maximum customer loss
Use the formula: Price increase % divided by (100% + Price increase %). This shows how many customers you can lose and still earn the same amount.
✨ Pro tip
Calculate the profit impact for your top 5 dishes before any increase. Multiply each dish's extra margin by its monthly sales volume to see which changes will generate the most cash.
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 my competitor stays cheaper?
Focus on value, not price. Make sure your quality, service and atmosphere justify the higher price. Not everyone chooses the cheapest option.
Can I raise prices if my restaurant isn't full?
Yes, sometimes it's even better. Higher margin per guest compensates for lower volume. Better to have 80 guests with good margins than 100 with poor margins.
Should I test price increases on just a few dishes first?
Absolutely. Start with 2-3 of your most popular items and track sales for 4-6 weeks. If volume drops less than 10%, you can confidently raise other menu 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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