A supplier is raising prices by 15% over three months. You have time to respond, but how do you calculate what this means for your margins? With the right calculation, you'll prevent losing money without realizing it and can adjust your menu prices in time.
What a price increase means for your margin
A supplier price increase directly impacts your food cost percentage. If you do nothing, your margin goes down. With three months' notice, you have enough time to calculate the impact and take action.
💡 Example:
Your steak currently costs €12/kg. In three months it will be €13.80/kg (+15%). Per 250-gram steak:
- Now: €3.00 per portion
- Then: €3.45 per portion
- Extra cost: €0.45 per steak
At 50 steaks per week = €1,170 extra costs per year
Calculate your new food cost percentage
Your current food cost percentage changes when ingredients become more expensive. Here's how you calculate it:
Formula: New food cost % = (New ingredient costs / Selling price excl. VAT) × 100
💡 Example:
Steak on the menu: €32.00 incl. 9% VAT
- Selling price excl. VAT: €29.36
- Ingredient costs now: €9.50 (food cost 32.4%)
- Ingredient costs then: €10.95 (food cost 37.3%)
Your food cost rises from 32.4% to 37.3% - that's too high!
Three options to respond
With three months to prepare, you have several options to protect your margin:
- Option 1: Raise selling price to keep food cost the same
- Option 2: Find an alternative supplier for a better price
- Option 3: Adjust the dish (different cut of meat, smaller portion)
⚠️ Heads up:
Doing nothing is also a choice, but then you accept earning less per dish. For high-volume items, this can cost thousands of euros per year.
Calculate your new minimum selling price
Want to keep your food cost percentage the same? Then you need to figure out what your new minimum selling price should be.
Formula: New selling price excl. VAT = New ingredient costs / (Desired food cost % / 100)
💡 Example:
You want to keep food cost at 32%:
- New ingredient costs: €10.95
- Desired food cost: 32%
- New price excl. VAT: €10.95 / 0.32 = €34.22
- New price incl. VAT: €34.22 × 1.09 = €37.30
You need to go from €32.00 to €37.30 - an increase of €5.30
Impact on your total revenue
Calculate what the price increase means for your total costs and whether your customers will accept the higher price:
- Add up how many portions of this dish you sell per month
- Multiply by the extra cost per portion
- This shows you the monthly impact on your bottom line
An app like KitchenNmbrs automatically calculates what price increases mean for all your dishes, so you can quickly see where action is needed.
How do you calculate the impact of a price increase?
Calculate the new ingredient costs
Take your current ingredient costs per dish and increase them by the supplier's percentage. At 15% price increase: current costs × 1.15.
Calculate your new food cost percentage
Divide the new ingredient costs by your selling price excl. VAT and multiply by 100. This shows you how high your food cost will be.
Determine your new selling price
Divide your new ingredient costs by your desired food cost percentage. Multiply by 1.09 for the price incl. VAT on your menu.
✨ Pro tip
Check every month whether suppliers have adjusted their prices. Many business owners only notice price increases once their margin has been too low for weeks.
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 prices immediately when a supplier gets more expensive?
Not necessarily right away, but do calculate the impact. If your food cost goes above 35%, you're probably losing money and adjustment is needed.
Is it better to find a different supplier?
It could be, but first check the quality and reliability. Saving a few euros isn't worth it if quality drops or deliveries become unreliable.
How do I communicate price increases to my guests?
Be honest about rising costs, but focus on quality. Update your menu gradually and not all dishes at once to spread the impact.
What if multiple suppliers raise their prices at the same time?
This often happens due to inflation or seasonality. Calculate the impact per dish and prioritize adjustments for your best-selling items first.
Do I need to account for VAT in this calculation?
Yes, always calculate with prices excl. VAT for your food cost calculation. Your menu price is incl. 9% VAT, but you calculate food cost excl. VAT.
📚 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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