Without a clear picture of your margin, you're investing blindly in products and ingredients. You buy based on gut feeling, which means you often overpay for ingredients that generate little return. The result: your inventory investment eats up your profit without you realizing it.
What happens to your investments?
Every euro you invest in ingredients needs to generate money. But without insight into your actual margin, you make the wrong choices:
- You buy expensive ingredients for dishes that barely make a profit
- You underinvest in popular, profitable dishes
- You keep dishes on the menu that actually cost you money
- You raise your prices too late or not at all
💡 Example:
You buy €500 worth of fish every week for your fish dishes. You think this is profitable.
- Weekly fish purchase: €500
- Sales value: €1,200 (incl. VAT)
- Sales value excl. VAT: €1,101
- Food cost: 45.4%
At 45% food cost, you're probably losing money on your fish dishes!
The hidden costs of blind investing
Without margin control, costs pile up:
1. Overinvestment in the wrong products
You buy premium ingredients for dishes where guests won't pay extra. The difference between regular and premium ingredients disappears into your costs.
2. Underinvestment in winners
Your most popular dishes get too little attention. You buy cheap ingredients while guests would pay more for quality.
3. Inventory that doesn't rotate
You buy ingredients that sell slowly. They spoil before you can use them, and your investment literally goes in the trash.
⚠️ Watch out:
Many business owners think a busy restaurant automatically means profit. But if your margin is too low, more sales also means more loss per dish.
How this affects your cashflow
Poor margin investments create a vicious cycle:
- You invest €2,000 per week in inventory
- Due to poor margins, you only get €1,800 back
- You have to cover €200 per week from other sources
- After a year, you've 'invested' €10,400 in losses
💡 Example:
Restaurant with €8,000 weekly revenue and unclear margins:
- Weekly purchase: €3,200 (40% of revenue)
- Healthy food cost would be: €2,400 (30%)
- Weekly loss: €800
- Annual loss: €41,600
This amount could have been invested in growth!
The solution: data-driven purchasing
With clear insight into your margins per dish, you can invest smartly:
Invest more in winners
Dishes with good margins and popularity deserve premium ingredients. Guests will pay for it and you'll earn more.
Optimize losers
Dishes with poor margins get cheaper ingredients or come off the menu. Stop losing money.
Test new investments
Before adding a new dish, calculate the margin. No more guessing, only facts.
KitchenNmbrs for smart investments
With a system like KitchenNmbrs, you immediately see which investments pay off:
- Real-time food cost per dish
- Overview of your most profitable products
- Automatic calculation when supplier prices change
- Insight into which ingredients cost the most
This way you invest your money in products that actually generate profit, instead of eating up your cashflow.
How do you get control of your investment return? (step by step)
Calculate your current food cost per dish
Add up all ingredient costs for your 10 best-selling dishes. Divide this by the sales price excl. VAT and multiply by 100. Anything above 35% eats up your profit.
Identify your biggest loss items
Look for dishes with food cost above 35% that also sell well. These cost you the most money because volume is high. Tackle these first.
Test alternatives for expensive ingredients
For unprofitable dishes: find cheaper alternatives or smaller portions. For profitable dishes: test whether premium ingredients justify a higher price.
✨ Pro tip
Check your 5 best-selling dishes for food cost every month. If those are good, you've solved 80% of your margin problems.
Calculate this yourself?
In the KitchenNmbrs app you can do this in just a few clicks. 7 days free, no credit card.
Was this article helpful?
Frequently asked questions
How do I know if an investment in ingredients pays off?
Calculate the food cost of the dish. If it stays below 30% and the dish is popular, the investment pays off. Above 35%, you're probably losing money.
What if my best dishes have high food cost?
You have two options: raise the sales price or lower ingredient costs. First test a price increase of 5-10% and see if your volume stays the same.
Should I stop buying if my margin is poor?
No, but buy more selectively. Focus on ingredients for your most profitable dishes and reduce purchases for loss items. Don't stop, just be more strategic.
How often should I check my margins?
At least monthly, but immediately when supplier prices change. Suppliers regularly raise prices, which can silently worsen your margin.
Can I track this without software?
Yes, but it takes a lot of time and you'll make more mistakes. Excel works for a few dishes, but becomes unwieldy with a full menu and changing prices.
📚 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.
Discover what KitchenNmbrs can do for you
From recipe calculation to allergen registration, from inventory management to menu engineering. One platform for complete control of your kitchen. Try it free for 14 days.
Start free trial →