Growing revenue while profit stays flat is like filling a bucket with holes in the bottom. More sales don't automatically mean more earnings. You need to calculate if your revenue growth actually delivers profit growth.
Why revenue growth doesn't always mean profit growth
The problem lies in variable costs. Every extra euro in revenue brings extra costs: more ingredients, more staff, more energy. These costs rise faster than your revenue, so you earn less per euro.
? Example:
Restaurant A grows from €50,000 to €60,000 revenue per month:
- Revenue growth: +€10,000 (+20%)
- Extra food cost: +€3,500 (35% of extra revenue)
- Extra staff: +€4,000 (more hours, weekend surcharges)
- Extra energy/other: +€1,000
Net profit growth: €10,000 - €8,500 = €1,500
Revenue grew 20%, but profit grew only 15%.
The core formula: Calculate marginal profit
For every extra euro in revenue, calculate how much remains net:
Marginal profit = Extra revenue - Extra variable costs
Variable costs are everything that increases with more sales:
- Food cost: More dishes = more ingredients
- Extra staff: Busier shifts = more hours or people
- Energy: More cooking = more gas/electricity
- Packaging/dishwashing: More plates, more washing
Most kitchen managers discover too late that they're spending €0.85 for every extra euro earned. They see growing sales numbers and assume success, but their bank account tells a different story.
Step-by-step calculation
Get your figures from 2 comparable periods (like last month vs. this month):
? Example calculation:
Period 1 (last month):
- Revenue: €45,000
- Food cost: €13,500 (30%)
- Staff costs: €18,000 (40%)
- Other costs: €4,500 (10%)
- Profit: €9,000 (20%)
Period 2 (this month):
- Revenue: €54,000 (+€9,000)
- Food cost: €17,280 (32%)
- Staff costs: €21,600 (40%)
- Other costs: €5,400 (10%)
- Profit: €9,720 (18%)
Result: €9,000 revenue growth delivered €720 profit growth = 8% marginal profit
⚠️ Note:
Food cost rose from 30% to 32% here. This happens due to pricier ingredients, more waste, or larger portions during busy times. It eats into your profit growth.
Signs that growth isn't profitable
Watch for these warning signals:
- Food cost percentage rises: From 30% to 33% means less margin per euro
- Disproportionate staff increases: 20% more revenue but 30% more labor costs
- Quality drops: Rushing leads to more waste and mistakes
- Higher purchase prices: More buying from expensive suppliers
How to achieve profitable growth
Focus on these factors:
? Example optimization:
By bringing food cost from 32% back down to 30% at €54,000 revenue:
- Current food cost: €17,280 (32%)
- Optimized food cost: €16,200 (30%)
- Extra profit: €1,080 per month
Total profit becomes €10,800 instead of €9,720 = 20% profit margin
Strategies for profitable growth:
- Keep food cost percentage stable by monitoring recipes and portions
- Invest in efficiency instead of just more staff
- Push high-margin dishes during busy times
- Track your figures weekly, not just monthly
Tools that help with monitoring
Manually tracking all these figures eats up time. A food cost system automatically calculates your cost per dish and shows trends in your margins. You'll immediately see if growth translates to profit growth.
How do you calculate if revenue growth is profitable? (step by step)
Gather figures from two comparable periods
Get your revenue, food cost, staff costs and other costs from last month and this month. Make sure the periods are comparable (no holidays or special events).
Calculate the difference in revenue and costs
Subtract period 1 from period 2 for each cost item. Pay special attention to whether your food cost percentage stays the same or rises with more revenue.
Calculate your marginal profit
Subtract all extra costs from your extra revenue. This number shows how much you keep net from each euro of growth. Aim for at least 15-20% marginal profit.
✨ Pro tip
Compare your marginal profit rate every 3 weeks during growth phases. If it drops below 12%, you're trading revenue for actual money in the bank.
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
What is good marginal profit with revenue growth?
Why does my food cost percentage rise with more revenue?
Can I also compare seasons for profit growth?
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Should I include delivery fees in my revenue growth calculations?
How do I handle seasonal staff costs in profit growth calculations?
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
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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