I'll admit it - I used to think tracking every freebie was overkill until I saw my actual numbers. Discounts and complimentary items vanish from your calculations while quietly eating your profits. Your POS shows menu prices, but you're earning far less per dish.
Why discounts mess with your margins
Every discount or complimentary side dish lowers your actual selling price. But your POS system still shows the original menu price. The difference disappears from view.
💡 Example:
A pasta carbonara costs €18.50 on your menu. You give loyal customers a 20% discount.
- Menu price: €18.50
- Actual revenue: €14.80
- Ingredient costs: €5.10
Planned food cost: 30.7% (€5.10 / €16.97 excl. VAT)
Actual food cost: 37.6% (€5.10 / €13.58 excl. VAT)
Which discounts you should track
You don't need to track every discount. Focus on the biggest impact:
- Structural discounts: Fixed discounts for loyal customers, staff, suppliers
- Promotional discounts: Happy hour, second course free, group discounts
- Complimentary sides: Bread, amuse, digestif
- Free upgrades: From house wine to premium wine at no extra charge
⚠️ Note:
One-off discounts for complaints or service recovery don't need systematic tracking. Those fall under incidental costs.
How to track discounts
Your team needs crystal-clear agreements about what gets recorded. Set these rules:
- What: Type of discount (loyal customer 20%, free appetizer, etc.)
- When: With every discount, directly on the bill
- Where: In your POS system or on a separate list
- Who: Everyone doing service
💡 Example registration:
Table 12, 4 people, €74 bill:
- Loyal customer discount 15%: -€11.10
- Complimentary appetizer: -€8.50
- Actual revenue: €54.40
Impact: from €67.89 to €49.91 excl. VAT = 26% less margin
Calculate impact on a weekly basis
Add up all discounts each week. Divide by your total revenue to get your actual discount percentage - it's the kind of thing you only learn after closing your first month at a loss.
Formula: Discount percentage = (Total discounts / Gross revenue) × 100
💡 Example weekly calculation:
- Gross revenue: €8,500
- Discounts: €680
- Complimentary sides: €320
Discount percentage: (€1,000 / €8,500) × 100 = 11.8%
Adjust margins for realistic numbers
If you consistently give 10% discounts, factor this into your pricing. Otherwise you're calculating with overly optimistic margins.
- Method 1: Increase your menu price by the discount percentage
- Method 2: Calculate with lower actual selling price
- Method 3: Add discounts to your costs
⚠️ Note:
Discounts aren't costs but lower revenue. Handle them separately from your food cost calculation.
Track digitally
Tools like KitchenNmbrs help you track discounts systematically. You can specify which discounts you give regularly per dish, so your actual margin calculates automatically.
How do you set up a discount tracking system?
Determine which discounts you want to measure
Make a list of all structural discounts: loyal customer discount, staff discount, happy hour, complimentary sides. Focus on discounts you give weekly.
Make agreements with your team
Establish how your team records discounts: in the POS system, on a separate list, or in an app. Make sure everyone knows what and when to record.
Count weekly and calculate impact
Add up all discounts each week and divide by your gross revenue. This gives you your actual discount percentage. Adjust your margin calculations accordingly.
✨ Pro tip
Track your discount impact on your 5 highest-margin dishes for 2 weeks straight. You'll discover which freebies are quietly destroying your most profitable items.
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
Do I need to track small discounts like complimentary coffee?
Only if you do this structurally. A free coffee worth €2.50 with every bill over €50 can cost hundreds of euros annually.
How do I handle discounts that my supplier pays for?
You don't need to include those in your margin calculation, since you're reimbursed for the discount. But it's helpful to track them separately for your administration.
Can I just add discounts to my food cost?
No, discounts are lower revenue, not higher costs. Calculate with your actual selling price instead of your menu price.
What if my discount percentage turns out to be very high?
Then you're probably giving away too much discount. Consider raising your menu prices or being more selective with discounts.
📚 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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