Your minimum selling price determines whether you make or lose money on each dish. Many restaurant owners guess a bit with their prices, causing them to unknowingly...
Your minimum selling price determines whether you make or lose money on each dish. Many restaurant owners guess a bit with their prices, causing them to unknowingly lose money. In this article, you'll learn exactly how to calculate a minimum selling price based on your actual food cost and desired margin.
What is a minimum selling price?
Your minimum selling price is the lowest amount you can charge for a dish to achieve your desired margin. If you go below that, you're not earning enough. If you go above it, you earn more — but you might also sell less because you become too expensive.
The formula is simple, but many entrepreneurs get it backwards:
Minimum selling price (excl. VAT) = Food cost / (Desired margin % / 100)
💡 Example:
Your steak costs €9.00 in ingredients and you want a food cost of 30%.
- Food cost: €9.00
- Desired food cost: 30%
- Minimum price: €9.00 / 0.30 = €30.00 excl. VAT
- On menu: €30.00 × 1.09 = €32.70 incl. VAT
If you sell for less than €32.70, you won't achieve your margin.
Calculate food cost correctly
Before you can calculate your minimum price, you need to know what your dish actually costs. That's more than just the main ingredient:
- Main ingredients: meat, fish, vegetables
- Sides: potatoes, rice, salad
- Sauces and dressings: including the butter on the plate
- Spices and seasonings: seems little, but adds up
- Garnish: parsley, radish, olive
⚠️ Watch out:
Don't forget trimming loss! If you buy whole fish for €18/kg but have 45% trimming loss, you're actually paying €32.73/kg for the fillet. Calculate with that actual price.
Different margins for different dish types
Not every dish needs the same margin. Many restaurants use different target margins:
- Meat and fish: 28-32% food cost
- Pasta and vegetarian: 25-30% food cost
- Starters: 30-35% food cost
- Desserts: 20-25% food cost
💡 Example different margins:
Restaurant with mixed menu:
- Salmon (€8.50 food cost, 30% margin): min. €31.02
- Pasta carbonara (€4.20 food cost, 25% margin): min. €18.35
- Tiramisu (€2.10 food cost, 20% margin): min. €11.45
This way cheap desserts compensate for pricier main courses.
Market prices and competition
Your minimum price is a floor, not a fixed price. Also check what the market is willing to pay:
- What do comparable restaurants in your area charge?
- What is your target audience used to paying?
- How unique is your dish?
If your minimum price is much higher than the market price, you have two options: lower your food cost or remove the dish from the menu.
💡 Example market check:
Your steak has a minimum price of €32.70, but competitors charge €28.00.
- Option 1: Buy cheaper (different cut of meat?)
- Option 2: Smaller portion
- Option 3: Cheaper sides
- Option 4: Accept lower margin on this dish
Choose consciously — never sell a dish below food cost.
Adjust prices when costs rise
Suppliers regularly raise their prices. Check at least every 3 months whether your minimum prices still add up:
- Have your purchase prices increased?
- Does your calculated food cost still match reality?
- Which dishes have dropped below your minimum price?
A system like KitchenNmbrs automatically calculates your minimum prices based on current purchase prices, so you immediately see which dishes need adjustment.
How do you calculate your minimum selling price? (step by step)
Calculate the actual food cost
Add up all ingredients that go on the plate: main ingredient, sides, sauces, spices and garnish. Don't forget trimming loss — if you buy whole fish, calculate with the actual fillet price after processing.
Determine your desired food cost percentage
Choose a realistic margin for this type of dish. Meat and fish usually 28-32%, pasta and vegetarian 25-30%. Check what's standard in your segment and what your operating costs allow.
Calculate the minimum price
Use the formula: food cost divided by (food cost % divided by 100). So with €8 food cost and 30% desired margin: €8 / 0.30 = €26.67 excl. VAT. For the menu: €26.67 × 1.09 = €29.07 incl. VAT.
✨ Pro tip
Check your minimum prices on your 5 best-selling dishes. If those are right, you have 80% of your profitability under control.
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 minimum price calculation?
No, always calculate first excl. VAT and then add VAT. For restaurant food that's 9%. This way you avoid getting your food cost percentage wrong.
What if my minimum price is higher than what competitors charge?
Then you have three options: buy cheaper, smaller portions, or find a different supplier. Selling below food cost is not an option — you'll lose money on every plate.
Can I use different margins for different dishes?
Yes, that's actually smart. Desserts can often have a lower food cost (20-25%) while meat and fish usually need 28-32%. This way you compensate for expensive ingredients with cheaper dishes.
How often should I check my minimum prices?
At least every 3 months, or immediately when suppliers raise their prices. Food prices fluctuate a lot, so what worked last month might be outdated now.
What if I have trimming loss — how do I factor that in?
Calculate with the actual price after processing. With 40% trimming loss on fish at €20/kg, you're actually paying €33.33/kg for the fillet (€20 divided by 0.60). Use that price in your food cost calculation.
📚 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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