Rising purchase prices eat into restaurant profits faster than most owners realize. Your food costs creep up silently while menu prices stay the same, turning profitable dishes into money losers. Here's how to calculate if your current prices still make sense after supplier increases.
Why checking menu prices after purchase increases matters
Suppliers bump their prices 2-3 times yearly on average. A 10% spike in your core ingredients pushes food costs from 30% to 33% overnight. Over twelve months, that translates to thousands in lost profit.
⚠️ Note:
Most operators discover their margins have tanked only at month-end. By then, the damage is done.
Calculate your new cost price per dish
Start with your top 5 sellers - they drive your overall profitability. For each dish, gather:
- Every ingredient with precise quantities
- Previous purchase prices per ingredient
- Updated purchase prices per ingredient
- Current menu selling price
💡 Example: Steak with fries
Original ingredient costs:
- Steak 200g: €4.20
- Fries 250g: €0.80
- Sauce and garnish: €1.50
Previous cost: €6.50
Now run the same calculation using updated pricing:
💡 Example: Updated costs (+15% on meat)
Revised ingredient costs:
- Steak 200g: €4.83
- Fries 250g: €0.80
- Sauce and garnish: €1.50
Updated cost: €7.13
Calculate your revised food cost percentage
With your new cost price in hand, determine the food cost percentage. Food cost = (Cost price / Selling price excl. VAT) × 100
Always work with pre-tax prices. If your dish sells for €32.00 including 9% VAT, the pre-tax price equals: €32.00 / 1.09 = €29.36.
💡 Example: Food cost calculation
Menu price: €32.00 incl. VAT = €29.36 excl. VAT
- Previous food cost: (€6.50 / €29.36) × 100 = 22.1%
- Revised food cost: (€7.13 / €29.36) × 100 = 24.3%
Jump: 2.2 percentage points
Determine your new minimum selling price
If food costs climb too high (beyond 35%), you must adjust selling prices. Calculate your new minimum using: Minimum price = Cost price / (Target food cost / 100)
Say you want to keep food costs at 28% with a €7.13 cost price?
💡 Example: New selling price
New price calculation:
- €7.13 / 0.28 = €25.46 excl. VAT
- €25.46 × 1.09 = €27.75 incl. VAT
From €32.00 to €34.50 (rounded)
Build a comprehensive adjustment overview
Create a detailed list of every dish requiring price changes. Document for each:
- Existing menu price
- Revised cost price
- Updated food cost percentage
- Recommended new menu price
- Customer price difference in euros
Focus first on dishes with the steepest food costs and highest sales volumes - that's the kind of thing you only learn after closing your first month at a loss. These items hit your bottom line hardest.
⚠️ Note:
Avoid raising every price simultaneously by more than €2-3 per dish. Customers spot dramatic jumps quicker than gradual shifts.
Timing your price adjustments
Optimal moments for price changes:
- During menu updates: Seasonal transitions or menu redesigns
- Incrementally: Modify 1-2 items monthly
- Emergency adjustments: Act immediately if food costs exceed 35%
Don't announce price changes to customers, but ensure staff can explain increases if asked.
How do you calculate whether your menu prices are still correct? (step by step)
Gather all ingredient prices
Make a list of your 5 best-selling dishes with all ingredients, quantities, and both old and new purchase prices. This gives you immediate insight into which dishes are most affected.
Calculate the new cost price per dish
Add up all ingredient costs based on the new prices. Don't forget garnishes, sauces, or oil - everything that goes on the plate counts toward the cost price.
Calculate the new food cost percentage
Divide the new cost price by your current selling price (excluding VAT) and multiply by 100. If this goes above 35%, you need to adjust your menu price.
Determine your new selling price
Divide your new cost price by your desired food cost percentage (for example 0.28 for 28%). Multiply the result by 1.09 for the price including VAT.
Plan your price adjustments
Don't adjust all prices at once. Start with dishes where the food cost has increased the most and spread adjustments over several weeks for less impact on customers.
✨ Pro tip
Track your garnish and cooking oil costs over 30-day periods - these seemingly minor ingredients often increase 20-25% without notice. A €0.15 jump per plate across 500 daily covers means €75 less profit daily.
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 often should I review my menu pricing?
Review food costs every 3 months minimum, or immediately after significant supplier price hikes. Suppliers often raise prices without obvious notification, making regular checks essential.
What happens if my food cost exceeds 35%?
You're likely losing money on that dish. Either raise your menu price immediately or reformulate the recipe with more affordable ingredients while maintaining quality standards.
Should I calculate using prices with or without VAT?
Always use pre-tax prices for food cost calculations. Your menu shows prices including 9% VAT, but cost analysis requires the excluding-VAT figure for accuracy.
How do I handle price changes with my staff?
Explain the reasoning behind increases - higher supplier costs - and train your team to communicate this honestly if customers inquire. Transparency about rising costs builds understanding.
📚 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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