You find the ideal selling price by combining your cost price, desired margin, and market position. Many restaurant owners only look at what competitors do, causing them to lose money on dishes that are too cheap. Your step-by-step approach starts with knowing your costs first.
Start with your minimum selling price
Before you look at the competition, you need to know what you must charge at minimum. That's your cost price divided by your desired food cost percentage.
💡 Example:
Your pasta carbonara costs €7.50 in ingredients. You want a maximum of 30% food cost.
- Minimum price excl. VAT: €7.50 / 0.30 = €25.00
- Minimum price incl. 9% VAT: €25.00 × 1.09 = €27.25
Anything below €27.25 doesn't generate enough revenue.
Analyze your market position
Your price needs to match how guests perceive your business. A bistro can't charge fine dining prices, even if the costs are identical.
- Budget/casual: Price often just below psychological thresholds (€19.95 instead of €20.50)
- Mid-range: More room for margin, focus on value perception
- Fine dining: Price matters less, quality and experience drive decisions
Check your direct competition
Find out what similar restaurants charge for comparable dishes. But pay attention: compare apples with apples.
⚠️ Watch out:
A 200-gram steak isn't the same as 250 grams. Calculate back to price per 100 grams to compare fairly.
Determine your pricing strategy
Now that you know your minimum and have explored the market, choose a strategy:
- Premium pricing: 10-20% above competition, focus on quality and service
- Market-aligned pricing: Comparable to competition, win on other points
- Penetration pricing: Deliberately lower, compensate with volume or other dishes
💡 Strategy example:
Your minimum price is €27.25. Competition charges €29.50 - €32.00.
- Penetration: €28.95 (lowest on market)
- Market-aligned: €30.50 (middle)
- Premium: €33.50 (above market, but still profitable)
Test and adjust
No price is set in stone. From analyzing actual purchasing data across different restaurant types, I've seen that monitoring your sales and margins is crucial for making smart adjustments.
- Too few sales at high price? Consider lowering or adding more value
- Lots of sales but low margin? Price can go up
- Check monthly if your food cost still matches actual costs
Psychological pricing tricks
Small adjustments to your price can have big impact on sales:
- €19.95 vs €20.00: The difference seems bigger than 5 cents
- €32 vs €32.00: Without decimals looks more luxurious
- Anchor price: Deliberately put an expensive dish on your menu to make other prices seem reasonable
💡 Anchor price example:
A wagyu steak for €65 suddenly makes your ribeye at €38 seem reasonable, even though €35 was your original plan.
How do you calculate the ideal selling price? (step by step)
Calculate your minimum price
Divide your cost price by your desired food cost percentage. At €8 cost price and 30% food cost: €8 / 0.30 = €26.67 excl. VAT. This is your absolute minimum.
Research competitor prices
Check at least 3-5 similar restaurants in your area. Pay attention to portion size and quality. Create a spreadsheet with their prices for similar dishes.
Determine your positioning
Deliberately choose budget, mid-range, or premium. Budget: just below market. Mid-range: market-aligned. Premium: 10-20% above market with added value.
Test and monitor
Start with your chosen price and monitor sales figures and margins. Adjust after 4-6 weeks if needed. Too few sales? Lower the price or add value.
✨ Pro tip
Audit your beverage and appetizer pricing against 3 direct competitors within the next 14 days. These categories often have 40% higher margins than mains and get less price scrutiny from customers.
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 always have to be cheaper than the competition?
No, only if that fits your strategy. Premium pricing can actually generate more profit, as long as you can deliver the added value through quality, service, or ambiance.
How often should I adjust my prices?
Check your prices at least quarterly. Adjust when there are major cost changes or when your margins come under pressure.
What if my minimum price is higher than the competition?
Then you have three options: lower your cost price by finding different suppliers or adjusting your recipe, elevate your positioning to premium, or accept that this dish will be less profitable.
Can I charge different prices for delivery?
Yes, many restaurants charge 10-15% more for delivery to compensate for platform fees and packaging. Customers usually accept this.
How do I prevent customers from being shocked by price increases?
Increase gradually (max 5-10% at a time), communicate value improvements, and timing matters. Beginning of season or after renovation works better than mid-month.
Should I round prices up or down to the nearest euro?
Depends on your positioning. Budget places benefit from €9.95 pricing, while upscale restaurants look more professional with clean numbers like €24 or €28.
What's the biggest mistake restaurants make with competitive pricing?
They copy competitor prices without knowing their own costs first. You might be selling a €12 dish for €15 because that's what others charge, not realizing you could profit at €18.
📚 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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