Your supplier just hit you with another price hike, and now you're staring at your menu wondering which numbers need to change. Most restaurant owners either panic and raise everything immediately, or they freeze up and watch their profits disappear for months. The reality is simpler than you think.
The impact of purchase price increases
Here's what trips up most operators: a 10% jump in purchase prices doesn't mean your menu prices need to climb 10%. Your ingredient costs represent just one slice of your total expenses. The real impact hinges entirely on your current food cost percentage.
💡 Example:
You sell a steak for €32.00 (incl. 9% VAT):
- Selling price excl. VAT: €29.36
- Current ingredient costs: €8.80
- Current food cost: 30%
After 10% purchase price increase: €8.80 × 1.10 = €9.68
Formula for minimum price increase
The math behind your new minimum selling price is straightforward:
New minimum price = New ingredient costs ÷ (Desired food cost % ÷ 100)
Want to keep the same food cost? Use your current percentage. Looking to boost margins? Drop that percentage lower.
💡 Steak calculation:
New ingredient costs: €9.68
Desired food cost: 30%
- New price excl. VAT: €9.68 ÷ 0.30 = €32.27
- New price incl. VAT: €32.27 × 1.09 = €35.17
- Price increase: from €32.00 to €35.17 = €3.17 (9.9%)
Different scenarios
Your required price bump changes dramatically based on food cost percentage. Lower food costs? You're more insulated from supplier price swings:
- At 25% food cost: 10% purchase increase = 2.5% price increase
- At 30% food cost: 10% purchase increase = 3.0% price increase
- At 35% food cost: 10% purchase increase = 3.5% price increase
- At 40% food cost: 10% purchase increase = 4.0% price increase
⚠️ Attention:
Running above 35% food cost makes every supplier increase brutal. Fix your recipes first before adjusting menu prices.
Timing of price adjustments
From years of working in professional kitchens, I've seen owners hesitate on price changes because they fear customer backlash. But every single day you delay costs real money. Here's your action timeline:
- Purchase price increase >5%: adjust within 2 weeks
- Purchase price increase >10%: adjust immediately
- Structural increases: evaluate monthly
💡 Calculation example of delay impact:
100 covers/day, 6 days/week, €3 loss per plate:
- Per week: €1,800 loss
- Per month: €7,200 loss
Delay costs you more than potential customer loss.
Communication with guests
Price increases happen constantly in hospitality. Your guests get it, provided you're upfront about it:
- Explain that purchase prices have risen
- Emphasize that you maintain quality
- Don't raise all prices at once
- Start with your best-selling dishes
Tools like KitchenNmbrs can help you track these cost changes and calculate the exact adjustments needed across your entire menu.
How do you calculate the minimum price increase? (step by step)
Calculate your new ingredient costs
Multiply your current ingredient costs per dish by 1.10 (for a 10% increase). For example: €8.80 × 1.10 = €9.68.
Determine your desired food cost percentage
Use your current food cost if you want to maintain the same margin, or a lower percentage if you want to improve your margin. For example: maintain 30% food cost.
Calculate your new minimum selling price
Divide the new ingredient costs by your desired food cost percentage. For example: €9.68 ÷ 0.30 = €32.27 excl. VAT. Multiply by 1.09 for the price incl. VAT: €35.17.
✨ Pro tip
Track your top 8 menu items weekly for cost fluctuations - they typically represent 60% of your food revenue. Any increase over 3% on these dishes demands immediate price adjustment within 72 hours.
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 make all dishes more expensive at once?
No, start with your best-selling dishes. They have the biggest impact on your total margin. Adjust the other dishes afterwards.
What if my competitor doesn't raise their prices?
Then your competitor is probably losing money. Focus on your own numbers and quality. Customers pay for value, not just the lowest price.
Can I offset the increase by reducing portion sizes?
You can, but be careful that guests notice this. A small price increase is often less noticeable than a clearly smaller portion.
What if I don't know my exact food cost?
Then you need to calculate your exact cost price first. Without this foundation, you can't make good decisions about price adjustments.
📚 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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