Expanding to a second city can double your revenue, but also your losses. Many ghost kitchen entrepreneurs make the mistake of expanding without properly analyzing their delivery margins. Learn how to use data to decide if expansion will be profitable.
Gather your current delivery margin data
Before you can decide on expansion, you need to know exactly how profitable your current location is. Not just the revenue, but the real margins after all costs.
💡 Example calculation current margin:
Monthly revenue: €45,000
- Platform fees (22%): €9,900
- Food cost (32%): €14,400
- Packaging (3%): €1,350
- Kitchen rent: €2,500
- Staff: €8,000
- Other costs: €1,500
Net profit: €7,350 (16.3%)
Pay special attention to these critical metrics per month:
- Average order value - how much does a customer order on average?
- Number of orders per day - what's your volume?
- Platform mix - what percentage via Thuisbezorgd vs Uber Eats?
- Peak hours performance - when do you do the most volume?
- Actual food cost - including packaging and delivery costs
Analyze the new market
A new city is a new market with different competition, different customers, and often different costs. You can't just assume your current performance will repeat itself.
💡 Market research checklist:
- How many similar ghost kitchens already exist?
- What are the average prices for your type of dishes?
- Which neighborhoods order the most via apps?
- Are there affordable kitchen spaces available?
- What are competitors' delivery times?
Also check the local costs:
- Rent prices - often 20-40% difference between cities
- Staff costs - minimum wage is the same, but availability varies
- Suppliers - do you have access to the same purchase prices?
- Marketing - how much does it cost to become visible on platforms?
Calculate your break-even point for the new location
With your current data and market research, you can calculate how many orders you need at minimum to be profitable in the new city. From tracking this across dozens of restaurants, I've seen that most operators underestimate their real break-even by 25-30%.
⚠️ Note:
Calculate with 20-30% lower performance than your current location for the first 6 months. It takes time to find customers.
Break-even formula:
Fixed costs per month ÷ (Average order value × Net margin %) = Minimum orders per month
💡 Break-even example:
New location fixed costs: €12,000/month
- Average order value: €28.50
- Net margin after all costs: 18%
- Margin per order: €28.50 × 0.18 = €5.13
Break-even: €12,000 ÷ €5.13 = 2,340 orders/month (78/day)
Test with a smaller investment first
Instead of immediately renting a second kitchen, you can test whether there's demand in the new city. Many entrepreneurs start with a pop-up or temporary partnership.
- Rent a kitchen per day - test 2-3 days per week first
- Partner with existing kitchen - use their space during quiet hours
- Catering events - test your concept at local events
- Social media campaign - measure interest before you invest
Ensure operational consistency
If you decide to expand, you need to make sure both locations deliver the same quality. Inconsistency destroys your brand quickly on delivery platforms.
💡 Consistency checklist:
- Identical recipes and portion sizes
- Same suppliers (or comparable quality)
- Standardized packaging
- Uniform photos on delivery platforms
- Consistent customer service level
Food cost calculators help keep recipes and costs identical between locations, so your margins don't get out of hand during expansion.
How do you calculate if expansion will be profitable? (step by step)
Analyze current performance from 6 months back
Gather all data from your current location: monthly revenue, number of orders, average order value, platform fees, food cost, and all fixed costs. Calculate your actual net margin per order.
Research costs for new location
Check rent prices, staff costs, supplier availability, and marketing costs in the new city. Calculate with 15-25% higher costs than expected for the first months.
Calculate break-even point for new location
Divide your expected fixed costs by your net margin per order. This gives you the minimum number of orders per month to break even.
Test the market small
Start with 2-3 days per week in a rented kitchen or via a partnership. Measure demand, order value, and customer satisfaction before you rent a full kitchen.
Set up systems for consistency
Make sure both locations have identical recipes, portions, packaging, and customer service. Inconsistency between locations destroys your reviews and repeat purchases quickly.
✨ Pro tip
Track your delivery margin data for exactly 90 days before making expansion decisions. Focus specifically on your profit per order during off-peak hours - this predicts sustainability better than peak performance.
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
How many orders do I need at minimum to be profitable in a new city?
That depends on your fixed costs and margin per order. As a rule of thumb: with €10,000 fixed costs and €4 net margin per order, you need 2,500 orders per month (83/day) to break even.
Should I use the same suppliers in both cities?
Ideally yes, for consistent quality and purchasing advantage. If that's not possible, thoroughly test all alternative suppliers to make sure your dishes taste identical.
How long does it take for a new ghost kitchen to become profitable?
On average 4-8 months, depending on competition and marketing. Plan for 50% of your expected volume in the first 3 months, then gradually build up.
Can I run both locations myself or do I need a manager?
With 2 locations you can often still switch between them yourself, but make sure you have strong systems and trained staff. With more than 2 locations, a manager per location usually becomes necessary.
What if the new location is still losing money after 6 months?
First analyze whether it's a marketing, operational, or market problem. Give it a maximum of 9-12 months, after that it usually becomes too expensive to maintain without clear growth.
How do platform commission rates differ between cities?
Commission rates are typically standardized nationally, but promotional costs and visibility fees can vary significantly between markets. Some cities require 50-70% more marketing spend to achieve the same ranking position.
📚 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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