Supplier price hikes can destroy your profit margins overnight. Too many restaurant owners nod along to new pricing without running the actual numbers. Here are the crucial questions that'll protect your bottom line.
Calculate the impact on your food cost
First things first - crunch the numbers on how this price change hits your food cost. Your dishes need to stay profitable, period.
💡 Example:
Your supplier bumps beef from €18/kg to €22/kg (+22%). Your 200g steak now costs:
- Old price: 0.2 kg × €18 = €3.60
- New price: 0.2 kg × €22 = €4.40
- Difference: €0.80 per portion
At 50 steaks per week: €2,080 extra costs per year
Explore alternatives
Don't just roll over and accept it. Shop around - this gives you serious negotiating power or shows you a better path forward.
- Other suppliers: Get at least 2 competing quotes
- Different products: Can you swap in cheaper ingredients that still work?
- Lower grade options: Will your customers notice a slight quality drop?
- Volume discounts: Does ordering more bring the unit price down?
⚠️ Note:
Cheapest doesn't always win. Factor in reliability, delivery schedules, and customer service quality before you jump ship.
Adjust your menu price
After managing kitchen operations for nearly a decade, I've seen too many restaurants absorb cost increases instead of passing them along. When your costs go up, your menu prices usually need to follow.
💡 Example:
Your steak now costs €4.40 in ingredients. At 30% target food cost:
- Minimum price excl. VAT: €4.40 / 0.30 = €14.67
- Price incl. 9% VAT: €14.67 × 1.09 = €15.99
- Old menu price was €14.50, new becomes €16.00
Price increase: €1.50 per dish
Timing of the price adjustment
You don't have to rush into menu changes immediately. Sometimes waiting for the right moment makes more sense.
- Menu refresh: Wait until you're already making changes
- Seasonal shifts: Spring and fall feel natural to customers
- Market movement: See if competitors are raising prices too
- Current inventory: Burn through existing stock at old costs first
Negotiate with your supplier
Don't accept every price increase as gospel. Most suppliers have wiggle room, especially if you've been loyal and consistent.
- Phased increases: Ask them to spread the jump over several months
- Payment terms: Longer payment windows help your cash flow
- Product access: Request first dibs on specialty items
- Service perks: Push for free delivery or flexible timing
💡 Negotiation example:
"I get that costs are rising, but 22% hits hard. How about we phase this:"
- Month 1-2: current pricing
- Month 3-4: +10%
- Month 5+: full new price
This buys you time to adjust your menu pricing strategy.
How do you assess a price increase? (step by step)
Calculate the impact per dish
Work out how much more expensive each dish becomes. Multiply the quantity you use by the price difference. This gives you the extra cost per portion.
Check your new food cost percentage
Divide the new ingredient costs by your current selling price (excl. VAT) and multiply by 100. If this exceeds 35%, you're probably losing money.
Explore alternatives
Request quotes from other suppliers and check if you can make the dish differently. This gives you negotiating room or an alternative if the price becomes too high.
Calculate your new selling price
Divide the new ingredient costs by your desired food cost percentage. Multiply by 1.09 for the price incl. VAT. This is your minimum new menu price.
Plan your response
Decide whether you accept the new price, negotiate, or switch suppliers. Also plan when you might adjust your menu price.
✨ Pro tip
Compare your supplier's price increases over the past 8 months against your menu price adjustments. If there's a gap, you're likely subsidizing their costs with your profits.
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 raise my menu price immediately if ingredients become more expensive?
Not necessarily. You can use your existing stock first at the old cost price. Plan price adjustments for natural timing like menu updates or seasonal changes.
How much of a price increase can I pass on to my guests?
That depends on your competition and customer base. Check what others are doing first. Increases of 5-10% usually slip by unnoticed, but anything above 15% gets attention.
Can I negotiate prices with large suppliers?
Absolutely, especially if you're a reliable customer with decent volume. Push for phased implementation, extended payment terms, or added services instead of just accepting sticker shock.
What's the biggest mistake restaurants make with supplier price increases?
Absorbing the costs instead of adjusting menu prices accordingly. Your margins will get squeezed until there's nothing left if you keep eating these increases.
📚 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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