Most restaurant owners believe cutting costs beats raising prices for boosting profits. But a €1 price increase on your best-selling dish goes straight to your bottom line. You'll discover exactly how to calculate what generates more: raising prices or saving costs.
The impact of price increase vs. cost savings
Cost savings require massive effort for tiny amounts. Price increases? Every extra euro flows straight to profit — provided you maintain customer volume.
💡 Example:
You sell 100 pastas per week for €18.50. You're considering:
- Option A: Raise price to €19.50 (+€1)
- Option B: Lower ingredient costs by €1 per portion
Impact per week: both options generate €100 extra
Why price increases often work better
Cost savings hit walls fast. You can't use infinitely cheaper ingredients without destroying quality. But price increases? They've got room to grow, especially if you've frozen prices for months.
- Cost savings: limited options, quality risks
- Price increase: direct impact, usually more potential
- Customer acceptance: small increases (5-10%) typically fly under the radar
⚠️ Important:
Price increases only work if you maintain customer volume. Excessive increases can send customers running.
The break-even calculation
Every price increase has a tipping point where you earn identical amounts, even with fewer guests. That's your break-even point.
Formula:
Break-even % = (Price increase % / (100% + Price increase %)) × 100
💡 Example:
You bump prices 10% (from €20 to €22):
- Break-even: 10% / 110% = 9.1%
- You can afford to lose 9.1% of customers
- With 100 weekly customers: maximum 9 customer loss
Keep more than 91 customers? You're making more money.
Calculate cost savings
Cost savings demand examining total margin impact. From analyzing actual purchasing data across different restaurant types, every euro saved on ingredients flows directly to profit.
- Cheaper supplier: immediately visible per dish
- Less waste: trickier to measure, massive impact potential
- Efficient portions: ensure quality doesn't tank
💡 Cost savings example:
You save €0.50 per portion on steak by switching suppliers:
- Sales: 50 steaks per week
- Savings per week: €25
- Savings per year: €1,300
Risk: does quality match? Will guests spot the difference?
Which option to choose?
Your best move depends on current circumstances. Examine your pricing, competition, and last adjustment date.
- Choose price increase if: prices haven't budged for ages, competitors charge more, your quality rocks
- Choose cost savings if: you're already pricey, waste is rampant, purchasing is inefficient
- Combine both: usually the smartest strategy
Tools and price optimization
Systems immediately reveal how price changes affect your food cost percentage. You can model different scenarios before committing to decisions.
How do you calculate what generates more profit? (step by step)
Calculate current profit per dish
Subtract ingredient costs from your selling price (excl. VAT). This is your profit per portion. Multiply by number of sales per week.
Calculate impact of price increase
Raise your price by €0.50 or €1.00. Calculate the break-even point: how many customers can you lose? Estimate whether this is realistic.
Calculate impact of cost savings
Look at where you can save: cheaper ingredients, less waste, different supplier. Calculate the total savings per week.
Compare the options
Put the amounts side by side. Watch out for risks: quality loss with cost savings, customer loss with price increases. Choose the least risky option.
✨ Pro tip
Track your top 3 dishes' profit margins over 30 days after any price adjustment. If margins improve by more than 2% without volume drops, you've found your sweet spot for future increases.
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
How much can I raise my prices without losing customers?
Increases of 5-10% usually go unnoticed, especially if you've kept the same prices for a long time. Test it carefully with your most popular dishes.
What if my competitors are cheaper?
Look at the total experience, not just the price. If you offer better quality, service, or atmosphere, you can charge higher prices. Focus on your added value.
How do I know if cost savings affect quality?
Test new suppliers on a small scale first. Ask your chef to be honest about quality differences. Monitor customer reactions and reviews in the first few weeks.
Can I use both strategies at the same time?
Yes, that's often the smartest approach. A small price increase combined with more efficient purchasing gives the best results without major risks.
How often should I adjust my prices?
Check at least every six months whether your prices are still right. If suppliers raise their prices, you need to follow. Don't wait too long, or the increases will be too large.
What's the maximum customer loss I can handle with a 15% price increase?
Using the break-even formula: 15% / 115% = 13%. You can lose up to 13% of customers and still maintain the same revenue.
Should I test price increases on high-volume or low-volume dishes first?
Start with medium-volume dishes that aren't your signature items. High-volume dishes carry too much risk, while low-volume ones don't provide meaningful data for decision-making.
📚 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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