The profit difference between two menu prices shows you how much extra you earn per dish with a price increase. This is crucial to know before you ...
Ever wondered exactly how much extra profit that €4 price bump will actually put in your pocket? The profit difference between two menu prices shows you how much extra you earn per dish with a price increase. You need this number before making any pricing decisions.
Why profit calculation between prices matters
Many restaurant owners raise their prices by gut feeling. €2 more sounds reasonable. But what does that mean for your profit? And how many covers can you lose before you're worse off?
By calculating the profit difference, you make conscious choices instead of guesses.
💡 Example:
You sell a steak for €28.00 and are considering €32.00:
- Old price: €28.00 incl. VAT (€25.69 excl. VAT)
- New price: €32.00 incl. VAT (€29.36 excl. VAT)
- Ingredient costs: €9.00
Profit difference per portion: €3.67
The formula for profit difference
You calculate the profit difference by working out the margin for both prices and taking the difference:
Profit difference = (New price excl. VAT - Ingredient costs) - (Old price excl. VAT - Ingredient costs)
Simplified: Profit difference = New price excl. VAT - Old price excl. VAT
⚠️ Note:
Always calculate with prices excluding VAT. The price on your menu includes 9% VAT for food.
Step-by-step calculation
Let's work through the example:
💡 Complete calculation:
Old situation (€28.00 incl. VAT):
- Sales price excl. VAT: €28.00 / 1.09 = €25.69
- Ingredient costs: €9.00
- Profit per portion: €25.69 - €9.00 = €16.69
New situation (€32.00 incl. VAT):
- Sales price excl. VAT: €32.00 / 1.09 = €29.36
- Ingredient costs: €9.00
- Profit per portion: €29.36 - €9.00 = €20.36
Profit difference: €20.36 - €16.69 = €3.67 per portion
Calculate impact on annual basis
You get real insight by multiplying the profit difference by your expected sales:
💡 Annual impact:
If you sell 3 steaks per day, 6 days a week:
- Per week: 3 × 6 = 18 portions
- Per year: 18 × 52 = 936 portions
- Extra profit: 936 × €3.67 = €3,435 per year
The break-even point: how many customers can you lose?
With a price increase, you might lose customers. But up to what point do you still come out ahead?
Break-even formula = (Old sales × Old profit per portion) / New profit per portion
💡 Break-even calculation:
You sold 936 steaks per year at €28.00:
- Old total profit: 936 × €16.69 = €15,622
- New profit per portion: €20.36
- Break-even point: €15,622 / €20.36 = 767 portions
You can lose 169 portions (18%) and still earn the same
Compare food cost percentage
Another way to assess profit difference is through food cost percentage:
- Old food cost: (€9.00 / €25.69) × 100 = 35.0%
- New food cost: (€9.00 / €29.36) × 100 = 30.7%
- Difference: 4.3 percentage point lower food cost
A lower food cost means a healthier margin and more room for other expenses. After managing kitchen operations for nearly a decade, I've seen how even small percentage improvements can transform your bottom line.
⚠️ Note:
Food cost isn't everything. Staff costs, rent, and other fixed expenses also determine whether a dish is profitable.
Practical tips for price comparison
- Always compare prices excluding VAT
- Calculate with realistic sales numbers
- Account for seasonal fluctuations
- Test price increases first on less popular dishes
- Monitor your sales numbers after price adjustments
With proper calculation methods, you see the direct effect of price changes on your profit per dish without second-guessing your decisions.
How do you calculate profit difference between two menu prices?
Calculate both prices excluding VAT
Divide the menu price by 1.09 to get the price excluding 9% VAT. For €28.00 that becomes €25.69 and for €32.00 that becomes €29.36.
Calculate profit per portion for both prices
Subtract ingredient costs from the sales price excluding VAT. With €9.00 ingredients you get €16.69 profit (old price) and €20.36 profit (new price).
Calculate the profit difference
Subtract the old profit from the new profit per portion. In this example: €20.36 - €16.69 = €3.67 extra profit per dish.
Multiply by expected sales
Work out how much you sell per year and multiply by the profit difference. With 936 portions per year that becomes €3,435 extra profit.
Calculate the break-even point
Divide your current total profit by the new profit per portion to see how much you need to sell at minimum. Everything above that is pure profit.
✨ Pro tip
Calculate profit differences for your top 3 highest-volume dishes every quarter. A €1 increase on a dish you sell 500 times yearly adds €500 straight to your bottom line.
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 my profit calculation?
No, always calculate with prices excluding VAT. You pass the VAT on to the tax authorities, so it's not yours. For restaurants that's 9% on food.
What if my ingredient costs also increase?
Then you calculate the new ingredient costs first and use those in both scenarios. The profit difference will be smaller, but the method stays the same.
How many customers can I lose with a price increase?
That depends on your profit margin. With an increase of €4 (like in the example) you can lose up to 18% of customers and still earn the same.
Do I need to make all dishes more expensive at once?
No, test with a few dishes first. Start with popular dishes you're confident about, or with dishes that are rarely ordered.
How often should I check my prices?
Check at least every 6 months whether your prices still match your purchasing costs. If suppliers raise their prices, you need to do the same to maintain your margin.
What is a healthy profit margin per dish?
After deducting ingredient costs, you should have at least 65-70% of your sales price left for other costs and profit. That amounts to a food cost of 30-35%.
Can I use this calculation for drinks and wine too?
Yes, but drinks have different VAT rates. Wine is 21% VAT instead of 9% for food. Adjust your calculations accordingly and remember that drinks typically have higher margins than food.
📚 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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