Your best-selling dish might be bleeding money. While that €32 steak looks impressive on paper, your €16 pasta could be delivering twice the profit. Menu popularity doesn't equal profitability.
Your best-selling dish might be bleeding money. While that €32 steak looks impressive on paper, your €16 pasta could be delivering twice the profit. Menu popularity doesn't equal profitability.
Why margin matters more than revenue
Most restaurant owners get excited about their top sellers. But high sales volume means nothing if you're barely breaking even on each plate. A dish that moves 50 times weekly with €2 margin brings in less money than something that sells just 20 times with €6 margin.
💡 Example:
Two crowd favorites:
- Pasta carbonara: €16 menu price, €4.50 ingredients = €10.19 margin (50x/week)
- Steak: €32 menu price, €12 ingredients = €17.36 margin (20x/week)
Pasta: 50 × €10.19 = €509.50/week
Steak: 20 × €17.36 = €347.20/week
The pasta outsells the steak but generates €162 more weekly profit. That's the difference between surviving and thriving.
Calculate gross margin per dish
Gross margin shows what remains after ingredient costs but before labor and overhead expenses.
Formula: Gross margin = Selling price excl. VAT - Ingredient costs
💡 Example calculation:
Salmon with risotto - menu price €28.50 (incl. 9% VAT):
- Selling price excl. VAT: €28.50 ÷ 1.09 = €26.15
- Ingredients: €8.60
- Gross margin: €26.15 - €8.60 = €17.55
Margin percentage: (€17.55 ÷ €26.15) × 100 = 67.1%
⚠️ Important:
Always work with prices excluding VAT. Your menu shows 9% VAT included, but you'll hand that over to tax authorities. Divide by 1.09 for your actual selling price.
Rank dishes by profitability
Build a simple spreadsheet with three columns: margin per portion, weekly sales volume, and total weekly profit contribution.
💡 Example ranking:
- Chicken Caesar salad: €11.20 margin × 35 sold = €392/week
- Pesto pasta: €9.80 margin × 40 sold = €392/week
- Ribeye steak: €15.60 margin × 15 sold = €234/week
- Fish of the day: €13.40 margin × 12 sold = €161/week
Your top performers deserve the most attention. These dishes literally keep your lights on.
Tackle low-margin dishes
Dishes with poor margins drain your resources. Here's what you can do about them:
- Bump the price: Test customer reaction to a modest increase
- Redesign the recipe: Find cheaper ingredients or reduce portion sizes
- Cut it loose: Remove dishes that can't be fixed
⚠️ Important:
Don't axe your signature dish just because margins are tight. Try price adjustments or cost reductions first. Some dishes build loyalty beyond their immediate profit.
Menu engineering in practice
Sort your entire menu into four buckets based on profit margins and sales frequency. In my experience, this is one of the most common blind spots in kitchen management - owners focus on what sells rather than what pays.
- Stars: High margin, high sales - push these hard
- Workhorses: Low margin, high sales - fix the pricing
- Puzzles: High margin, low sales - improve marketing
- Dogs: Low margin, low sales - eliminate them
This analysis reveals exactly where your money comes from and where it disappears.
How do you compare dishes on margin? (step by step)
Calculate ingredient costs per dish
Add up all ingredients that go into one portion. Don't forget garnishes, sauces, oil and butter. Use your actual supplier prices.
Determine selling price excluding VAT
Divide your menu price by 1.09 to get the price excl. VAT. Subtract the ingredient costs from this to calculate your gross margin.
Multiply by number of sales per week
Check how many times each dish sells per week. Multiply this by the margin per portion to see the total weekly profit per dish.
Rank by total weekly profit
Order your dishes from highest to lowest weekly profit. Focus your marketing and menu placement on the dishes at the top.
✨ Pro tip
Calculate profit per square inch of menu space for each dish. Divide weekly profit by the physical space each item takes on your menu - this reveals which dishes deserve prime real estate.
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 when calculating margin?
Never include VAT in margin calculations. You're just collecting that 9% for the tax office. Divide your menu price by 1.09 to get your actual selling price, then subtract ingredient costs.
What's a realistic margin percentage for restaurants?
Target 65-72% gross margin on food items. That means ingredients should cost 28-35% of your selling price. Remember, this is before labor, rent, and other operating expenses hit your bottom line.
How often should I review my dish margins?
Check your top 10 sellers monthly at minimum. Supplier prices change constantly, and your margins can erode without warning. Weekly reviews are even better if you have the time.
Can I compare my margins to other restaurants?
Not really. Every restaurant has different rent, labor costs, and supplier relationships. Focus on improving your own numbers month over month rather than benchmarking against competitors.
📚 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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