A healthy food margin determines whether your restaurant is profitable. Many restaurant owners don't know what a good margin is and lose money on every dish as a result...
Do you know if your restaurant dishes actually make money? Many restaurant owners think they're profitable but lose money on every plate served. Your food margin is the difference between success and failure.
What is a healthy margin?
A healthy food margin for most restaurants sits between 65% and 72%. This means your food cost (ingredient costs) runs between 28% and 35% of your selling price.
💡 Example:
You sell a pasta for €18.50 (incl. 9% VAT):
- Selling price excl. VAT: €16.97
- Ingredient costs: €5.10
- Food cost: 30%
Margin: 70% - a healthy margin!
Margins by restaurant type
The ideal margin varies by type of establishment:
- Fine dining: 65-72% margin (28-35% food cost)
- Casual dining: 65-72% margin (28-35% food cost)
- Bistro/brasserie: 68-75% margin (25-32% food cost)
- Pizzeria: 72-80% margin (20-28% food cost)
- Fast casual: 70-75% margin (25-30% food cost)
⚠️ Note:
These are guidelines, not absolute rules. Your margin depends on your location, concept, target audience, and cost level.
How do you calculate your margin?
The formula for margin is straightforward:
Margin % = 100% - Food cost %
And you calculate food cost like this:
Food cost % = (Ingredient costs / Selling price excl. VAT) × 100
💡 Example calculation:
Steak on the menu for €32.00 (incl. 9% VAT):
- Selling price excl. VAT: €32.00 / 1.09 = €29.36
- Ingredient costs: €9.50
- Food cost: (€9.50 / €29.36) × 100 = 32.4%
Margin: 100% - 32.4% = 67.6%
Why is a healthy margin important?
Your food margin must cover all your other expenses:
- Labor costs: 25-35% of revenue
- Rent and utilities: 8-15% of revenue
- Other costs: 10-15% of revenue
- Profit: 5-15% of revenue
Most kitchen managers discover too late that if your margin is too low, there's nothing left for you.
💡 Calculation example:
Restaurant with €500,000 annual revenue:
- Food cost 30%: €150,000
- Labor 30%: €150,000
- Rent/utilities 12%: €60,000
- Other costs 13%: €65,000
Profit: €75,000 (15%)
What if your margin is too low?
If your margin drops below 65%, you have three options:
- Raise prices: Most direct solution
- Lower ingredient costs: Find a different supplier or reduce portion sizes
- Adjust recipes: Use cheaper ingredients
⚠️ Note:
Never drastically reduce quality. Guests will notice and won't return. Small adjustments work better.
Tracking margins digitally
Many restaurants track margins in Excel, but that eats up tons of time. An app automatically calculates your food cost and margin per dish. You enter your recipes and purchase prices, then immediately see if each dish turns a profit.
This way you can quickly adjust if a supplier raises their prices or if you notice a dish isn't generating enough profit.
How do you calculate your margin? (step by step)
Gather all ingredient costs
Add up all the costs of ingredients for one portion. Don't forget: garnish, sauces, oil, butter, and everything that goes on the plate.
Calculate selling price excl. VAT
Divide your menu price by 1.09 (at 9% VAT). For example: €32.00 / 1.09 = €29.36 excl. VAT.
Calculate food cost percentage
Divide ingredient costs by selling price excl. VAT and multiply by 100. For example: (€9.50 / €29.36) × 100 = 32.4%.
Calculate your margin
Subtract food cost from 100%. For example: 100% - 32.4% = 67.6% margin. Between 65-75% is healthy for most restaurants.
✨ Pro tip
Track your margin weekly on your 3 highest-volume dishes during peak season. These dishes drive 60% of your profitability.
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
What is a good margin for a pizzeria?
Pizzerias can often achieve a margin of 72-80% because ingredient costs are relatively low. A food cost of 20-28% is normal for pizzas.
Should I include VAT in my margin calculation?
No, always calculate with prices excluding VAT. You'll pass the VAT on to the tax authorities, so it doesn't count toward your margin.
What if my margin drops below 60%?
Then you're probably losing money. First check your cost price calculation, then raise your prices or lower your ingredient costs.
Can I increase my margin by giving smaller portions?
Yes, but do this carefully. Guests notice drastic reductions and may not come back. Small adjustments of 10-15% are less noticeable.
📚 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 →