Most new restaurants think they can wing their pricing and figure it out later. That's the fastest way to join the 60% that close within their first year. Setting profitable prices from day one isn't optional—it's what separates survivors from casualties.
Why the first three months are decisive
Your first 90 days determine everything. You're burning through startup capital, building a customer base from scratch, and every underpriced dish pushes you closer to the edge. Smart pricing isn't about maximizing revenue—it's about staying alive long enough to build momentum.
⚠️ Watch out:
Starting with rock-bottom prices to attract customers backfires spectacularly. You're conditioning guests to expect bargain rates while bleeding money on every order.
Calculate your break-even point first
Before pricing anything, figure out what you need just to keep the lights on. Your monthly fixed costs include:
- Rent and service charges
- Personnel costs (including yourself)
- Energy, water, gas
- Insurance
- Equipment depreciation
- Marketing and administration
💡 Example:
40-seat restaurant, monthly fixed costs:
- Rent: €4,500
- Personnel: €8,000
- Energy: €800
- Other costs: €1,200
Total fixed costs: €14,500 per month
Open 25 days monthly? You need €580 daily just to break even—before earning a single cent in profit.
Calculate cost price per dish
Every euro flows through your plates. That's why knowing your exact dish costs isn't negotiable.
The cost price formula is:
Cost price = Ingredient costs + (Fixed costs per portion) + Profit margin
💡 Example cost price calculation:
Pasta carbonara:
- Ingredients: €5.20
- Fixed costs per portion: €8.50 (€580 ÷ 68 covers/day)
- Desired profit: €4.00
Minimum selling price: €17.70 excl. VAT = €19.29 incl. VAT
Round to €19.50 on your menu.
The 28-35% food cost rule
Keep ingredient costs between 28% and 35% of your selling price (excluding VAT). This leaves room for overhead, wages, and actual profit.
Food cost formula:
Food cost % = (Ingredient costs ÷ Selling price excl. VAT) × 100
💡 Example food cost check:
Steak priced at €32.00 incl. VAT:
- Selling price excl. VAT: €32.00 ÷ 1.09 = €29.36
- Ingredient costs: €9.20
- Food cost: (€9.20 ÷ €29.36) × 100 = 31.3%
Perfect! Falls within 28-35% range
Competitor analysis and positioning
Your prices must align with customer expectations for your segment. Scout 5-8 similar restaurants nearby and analyze:
- Main course price ranges
- Portion sizes
- Ingredient quality
- Service style and atmosphere
- How busy they actually are
Pick your lane deliberately: budget option, premium choice, or middle ground. Each strategy has trade-offs, but sitting between segments kills restaurants faster than anything else—the kind of thing you only learn after closing your first month at a loss.
⚠️ Watch out:
Don't copy competitor prices blindly. You have no idea whether they're profitable or hemorrhaging cash. Calculate your costs first, then position accordingly.
Build in flexibility for the first months
Your first 90 days teach you about customers and kitchen reality. Build in wiggle room:
- Daily specials: Test dishes without overhauling your main menu
- Lunch deals: Different pricing for slower periods
- Size options: Small/regular/large gives price flexibility
- Monthly reviews: Adjust based on real performance data
💡 Example adjustment strategy:
Month 1: Launch with calculated prices
Month 2: Track winners vs. duds
Month 3: Cut losers, boost profitable dishes
Target: 35% average food cost across full menu
Digital tools for price control
Manual cost tracking eats time you don't have in a new restaurant. Tools like KitchenNmbrs let you:
- Auto-calculate dish costs instantly
- Monitor food cost percentages in real-time
- Adjust prices quickly when supplier costs jump
- Spot profit winners and money losers fast
During those chaotic opening months, this support isn't nice-to-have—it's essential for survival.
How do you calculate your pricing strategy? (step by step)
Calculate your fixed costs per day
Add up all monthly fixed costs (rent, personnel, energy, insurance) and divide by the number of days you're open. This is your minimum revenue per day to break even.
Calculate cost price per dish
Add up all ingredient costs per portion. Add to that: fixed costs per portion (daily fixed costs ÷ expected number of covers) plus desired profit margin.
Check your food cost percentage
Divide ingredient costs by selling price excl. VAT and multiply by 100. Keep this between 28-35% for a healthy margin. Adjust prices if you go above 35%.
Analyze the competition
Visit 5-8 comparable restaurants and note price level, portion size, and quality. Position yourself deliberately in the market, but never blindly copy without knowing your own cost price.
Plan monthly reviews
Evaluate each month which dishes sell well and are profitable. Adjust your menu and prices based on actual data, not on gut feeling.
✨ Pro tip
Lock in costs for your core 6-8 dishes before opening day, then track their performance religiously for the first 30 days. Adjust portion sizes before touching prices—it's less visible to 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
Can't I just copy my competitor's prices?
That's financial suicide. You don't know if they're profitable or drowning in red ink. Your rent, labor costs, and supplier deals are different. Calculate your own costs first, then see how you stack up against the competition.
What if my calculated prices are way higher than competitors?
You've got three choices: cut your costs, reposition as a premium option, or accept lower margins. Selling below cost isn't a choice—it's a guaranteed path to bankruptcy within months.
How often should I adjust prices during the first quarter?
Do a thorough monthly review, but don't change prices constantly. Only make emergency adjustments if supplier costs spike dramatically. Too many price changes confuse both customers and staff.
Should I factor VAT into my food cost calculations?
Never calculate food cost using VAT-inclusive prices. VAT goes straight to the government—it's not part of your margin. A €21.80 menu price is €20.00 before VAT, and that's what matters for your percentages.
What if I'm not hitting my break-even customer count?
Time to choose: invest more in marketing to drive traffic, or slash your fixed costs fast. Dropping prices rarely works unless you're adding real value. Racing to the bottom kills more restaurants than high costs do.
Should I price my appetizers and desserts differently than mains?
Absolutely. Appetizers and desserts typically run 20-25% food cost since customers are less price-sensitive on these add-ons. Use them to boost your average check and overall profitability.
📚 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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