Compare your weekly purchases to revenue (excluding VAT) to calculate your food cost percentage. Healthy restaurants maintain 28-35%; anything above 35% means you're losing money on every dish. Track weekly for quick alerts, monthly for reliable trends.
Checking if your purchases match revenue is like balancing a checkbook – except the stakes are your restaurant's survival. Most owners watch their sales religiously but ignore the money flowing out for ingredients. This simple comparison reveals whether you're actually making money or just moving it around.
Why compare purchases and revenue?
Most restaurant owners get excited about busy weeks and big revenue numbers. But revenue means nothing without context. If you spent €3,000 on ingredients to generate €8,000 in sales, you're in a very different position than if you spent €2,200.
💡 Example:
Restaurant De Smulhoek in week 12:
- Revenue: €8,500
- Purchases: €3,200
- Food cost: 37.6%
That's dangerously high. Healthy food costs run 28-35%.
Weekly tracking shows you trends before they become disasters. Rising purchases with flat revenue? Your profit margin is shrinking fast.
Calculate the purchase-revenue ratio
The purchase-revenue ratio tells you what percentage of revenue goes toward ingredients. It's your food cost percentage – the number that determines if you're profitable.
Formula:
Purchase-revenue ratio = (Total purchases / Revenue excl. VAT) × 100
💡 Example calculation:
Week 15 figures:
- Revenue: €9,200 incl. VAT
- Revenue excl. VAT: €9,200 / 1.09 = €8,440
- Total purchases: €2,650
Ratio: (€2,650 / €8,440) × 100 = 31.4%
⚠️ Note:
Always use revenue excluding VAT. That VAT money goes straight to the tax authority – it was never yours to begin with.
Signs that something's wrong
These red flags indicate problems between your purchasing and revenue:
- Climbing ratio: Purchases increasing while revenue stays flat
- Wild swings: 28% one week, 38% the next
- Consistently above 35%: You're bleeding money on every dish
- Growing inventory: Buying too much for your actual sales volume
Weekly vs. monthly checks
Weekly: Gives you quick alerts but can be misleading due to large deliveries or inventory fluctuations.
Monthly: Provides the real picture since inventory levels and purchasing patterns balance out over time.
💡 Example monthly overview:
March 2024:
- Total revenue: €42,500 excl. VAT
- Total purchases: €13,600
- Average ratio: 32.0%
Week 1: 35% (massive delivery), Week 4: 28% (minimal purchasing). Monthly average reveals the true story.
What to do about deviations
After managing kitchen operations for nearly a decade, I've seen ratios consistently above 35% destroy otherwise successful restaurants. Here's how to fix it:
- Audit portion sizes: Is your kitchen staff being too generous?
- Review menu pricing: Are your prices keeping up with ingredient costs?
- Track waste religiously: What's going in the bin each night?
- Analyze menu mix: Are customers gravitating toward your lowest-margin items?
⚠️ Note:
An unusually low ratio might mean you're running dangerously low on inventory. Don't celebrate until you check your stock levels.
Digital vs. manual tracking
Excel spreadsheets work for basic tracking, but they're time-consuming and error-prone. Plus, you won't spot problems until it's too late. Digital systems automatically calculate ratios and flag unusual patterns immediately.
How do you check purchases vs. revenue? (step by step)
Gather your weekly figures
Write down your total revenue from last week (from your POS system) and add up all purchase invoices. Make sure you're using the same period.
Calculate your revenue excluding VAT
Divide your revenue by 1.09 to remove the VAT. For example: €8,500 / 1.09 = €7,798 excl. VAT. Use this to calculate further.
Calculate your purchase-revenue ratio
Divide your total purchases by your revenue excl. VAT and multiply by 100. For example: €2,400 / €7,798 × 100 = 30.8%. This is your food cost percentage.
Compare with previous weeks
Note this percentage and compare it with previous weeks. Large deviations (more than 5 percentage points) deserve attention. Find out what was different.
✨ Pro tip
Track your ratio every Tuesday morning using the previous week's invoices and POS data. Set a 33% threshold alert – anything above this for two consecutive weeks demands immediate investigation.
Calculate this yourself?
In the KitchenNmbrs app you can do this in just a few clicks. 7 days free, no credit card.
Was this article helpful?
Frequently asked questions
Should I include VAT in my calculation?
Never include VAT in your revenue calculations. That 9% belongs to the tax authority, not your business. Divide your gross revenue by 1.09 to get the actual revenue for your ratio calculations.
What if my ratio suddenly jumps much higher?
Investigate immediately – this usually signals supplier price increases, portion creep in the kitchen, or increased waste. Sometimes it's as simple as a chef being too generous with expensive ingredients. Document the change and trace it back to its source.
Why does my ratio swing wildly from week to week?
Large deliveries, inventory buildups, or minimal purchasing weeks create these fluctuations. A €1,500 delivery in a slow week will spike your ratio artificially. Focus on monthly trends for the real picture.
Should I track food and beverages separately?
Yes, especially if you serve alcohol. Beverages typically have much lower food costs (often 15-25%) compared to kitchen items (28-35%). Tracking them separately gives you clearer insights into each part of your operation.
📚 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.
Calculate it yourself with KitchenNmbrs
All the formulas you learn here — KitchenNmbrs calculates them automatically. Enter your ingredients and instantly see your food cost, margin, and selling price. Try it free for 14 days.
Start free trial →