Food costs are the foundation of your profit. If you don't know what each dish costs, you're flying blind and losing money without realizing it. In this article, discover the concrete risks and how to prevent them.
Why food costs matter so much
Your food cost determines whether you make or lose money on each dish. Without this knowledge, you're making decisions based on gut feeling, and that usually goes wrong.
💡 Example:
A bistro sells 50 steaks daily for €28.00. The owner thinks he makes €8 profit per steak.
- Actual ingredient costs: €12.50 (including garnish and sauce)
- Selling price excl. VAT: €25.69
- Actual profit: €13.19 per steak
Difference: €5.19 less profit than expected = €94,845 per year!
The biggest risks at a glance
Risk 1: Prices too low
Without food cost knowledge, you often set prices too low. You think you're making profit, but actually you're losing money on every plate.
- You underestimate ingredient costs
- You forget garnishes, sauces, and oil
- You don't account for trimming loss
- You don't adjust prices when purchasing costs rise
Risk 2: Wrong menu choices
Without food cost knowledge, you might be promoting the wrong dishes. You're pushing guests toward dishes that don't generate much profit.
💡 Example:
A restaurant has two popular dishes:
- Salmon: €24.00 sales, €9.50 cost = €12.50 profit
- Pasta: €16.50 sales, €4.20 cost = €11.13 profit (excl. VAT)
Salmon generates more profit, but without food cost knowledge you might push pasta because it's more popular.
Risk 3: No control over supplier price increases
Suppliers regularly raise their prices. Without food cost monitoring, you notice this too late and fall behind for months.
- Meat prices rose an average of 12-18% in 2023
- Fish became 15-25% more expensive
- Dairy increased by 8-15%
⚠️ Watch out:
A 15% increase in your main ingredients can push your food cost from 30% to 35%. On €500,000 in sales, that costs you €25,000 per year.
The financial impact in numbers
Scenario 1: Food cost 5% too high
If your food cost is 35% instead of 30%, you lose a lot of money:
- At €300,000 sales: €15,000 per year
- At €500,000 sales: €25,000 per year
- At €800,000 sales: €40,000 per year
Scenario 2: One dish consistently mispriced
💡 Example calculation:
Popular pasta carbonara:
- Sales: 80 portions per week
- Price: €16.50 (€15.14 excl. VAT)
- Assumed food cost: €4.50
- Actual food cost: €6.20
Loss: €1.70 per portion × 80 × 52 = €7,072 per year on one dish!
How food cost ignorance develops
Common thinking mistakes
- "I roughly know what it costs" - Estimates are often 20-40% too low
- "We're doing well, so it must be right" - Sales say nothing about profit per dish
- "My chef keeps an eye on it" - Chefs aren't food cost experts
- "Excel is too much work" - So you don't do it at all
Practical obstacles
Many entrepreneurs want to track food costs, but:
- No time for complicated calculations
- Supplier invoices are unclear
- Trimming loss is hard to estimate
- Recipes aren't centralized anywhere
- Price changes get forgotten
The solution: systematic food cost management
What you need to know at minimum
For each dish on your menu:
- Exact ingredient list with quantities
- Current purchasing prices per ingredient
- Trimming loss percentage
- Total food cost per portion
- Food cost percentage
How often should you check?
- Weekly: Your 5 best-selling dishes
- Monthly: All dishes on your menu
- With every invoice: Check if prices have risen
- For new dishes: Calculate food cost before launch
⚠️ Watch out:
Start small. Focus on your 5 most popular dishes first. Once those are sorted, you've already solved 70-80% of your problem.
Practical first steps
You don't need to do everything at once. Start with these basics:
- Choose your top 3 dishes - The ones you sell the most
- List all ingredients - Don't forget garnishes and sauces
- Find your recent invoices - What do you actually pay per kilo/liter?
- Calculate the food cost - Including trimming loss
- Check your food cost percentage - Below 35%? Then you're good
A system like KitchenNmbrs automates this process, so you don't have to recalculate every time. But the most important thing is that you start tracking your food costs at all.
How do you check if your food costs are correct? (step by step)
Gather data on your top dish
Take your best-selling dish and list all ingredients with exact quantities. Don't forget garnishes, sauces, oil, and butter - everything that goes on the plate counts.
Calculate actual purchasing costs
Find your recent invoices and note the price per kilo or liter for each ingredient. Factor in trimming loss: with 20% loss, €10/kg actually becomes €12.50/kg.
Check your food cost percentage
Add up all ingredient costs and divide by your selling price excl. VAT, then multiply by 100. Above 35%? Then you're probably losing money on this dish.
✨ Pro tip
Check your POS system every month: which 5 dishes do you sell the most? If those food costs are correct, you have 70% of your profit under control.
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
How often should I check my food costs?
Check your 5 best-selling dishes weekly and your entire menu monthly. With every supplier invoice, check if prices have risen.
What if I don't have time for food cost calculations?
Start with your 3 most popular dishes. That takes 30 minutes and covers 60-70% of your sales. An app like KitchenNmbrs automates the calculations.
What food cost percentage is normal?
For restaurants, 28-35% is standard. Above 35% becomes difficult to be profitable, below 25% might mean you're too expensive for your target market.
Should I include VAT in food cost calculations?
No, always calculate with prices excl. VAT. Your menu price of €24.00 is actually €22.02 for the food cost calculation at 9% VAT.
What do I do if my supplier raises prices?
Immediately recalculate your new food cost. If it goes above 35%, you need to adjust your selling price or find cheaper alternatives.
How do I factor trimming loss into food costs?
With 20% trimming loss, you have 80% yield. Divide your purchasing price by 0.80. So €10/kg becomes €12.50/kg actual food cost.
📚 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 →