Restaurants lose an average of €8,000-15,000 annually from underpriced menu items alone. Most owners don't realize how much profit leaks through dishes with excessive food costs. You can calculate exactly how much extra revenue you'll generate by fixing your pricing structure.
Why underpriced dishes drain your profits
Any dish with food costs exceeding 35% actively hurts your bottom line. The gap between current earnings and potential profit accumulates fast. A single dish sold 50 times monthly with just €2 insufficient margin costs you €1,200 yearly.
💡 Example:
Your pasta carbonara runs at 42% food cost. With an optimal 30% food cost, you'd capture €3.20 additional margin per plate:
- Current price: €18.50 incl. VAT (€16.97 excl.)
- Ingredient costs: €7.10
- Current food cost: 42%
- At 30% food cost: minimum €21.70 excl. VAT = €23.65 incl.
Additional margin per plate: €5.15
Step 1: Spot your underpriced dishes
Focus on your top 5 sellers first. These dishes create the biggest profit impact. Calculate each dish's food cost and flag anything above 35%.
You'll need these numbers for each dish:
- Precise ingredient costs per portion
- Current selling price excl. VAT
- Monthly sales volume
⚠️ Note:
Count everything: main ingredients, garnishes, sauces, cooking oil, butter. That single cherry tomato matters too.
Step 2: Calculate your new minimum price
For every underpriced dish, determine the minimum selling price at 30% food cost. Here's the formula:
Minimum price excl. VAT = Ingredient costs ÷ 0.30
Then multiply by 1.09 for the price including 9% VAT.
💡 Example calculation:
Steak with ingredient costs of €11.50:
- Minimum price excl. VAT: €11.50 ÷ 0.30 = €38.33
- Price incl. 9% VAT: €38.33 × 1.09 = €41.78
- Rounded: €41.95
If you're currently charging €36.00, you're losing €5.95 per plate.
Step 3: Calculate your total earning potential
For each dish, determine your extra monthly earnings. Multiply the margin difference by monthly sales volume. It's the kind of thing you only learn after closing your first month at a loss - every underpriced plate compounds your losses.
Extra profit per month = (New margin - Current margin) × Monthly sales
💡 Complete calculation:
Restaurant with 5 underpriced dishes:
- Pasta: €3.20 extra × 85 sales = €272/month
- Steak: €5.95 extra × 45 sales = €268/month
- Fish: €4.10 extra × 35 sales = €144/month
- Salad: €2.80 extra × 60 sales = €168/month
- Burger: €1.90 extra × 75 sales = €143/month
Total monthly increase: €995
Annual increase: €11,940
Smart implementation of price adjustments
Avoid raising all prices simultaneously. Customers spot dramatic changes quickly. Spread increases across 2-3 months. Begin with less popular dishes to gauge customer response.
- Week 1-2: Adjust 2 dishes
- Week 3-4: Review sales data
- Week 5-6: Adjust next 2 dishes
Track your sales numbers closely. If a dish's sales drop significantly, consider a smaller increase.
Alternative profit strategies
Price increases aren't your only option. You can also:
- Reduce portions: 10% smaller portion = 10% lower ingredient costs
- Source cheaper ingredients: Same dish, different supplier or grade
- Modify the dish: Swap expensive ingredients for affordable alternatives
⚠️ Note:
Never reduce quality without customer notification. Transparency prevents disappointment and negative reviews.
How do you calculate the extra earning potential? (step by step)
Make a list of your 5 best-selling dishes
Note for each dish: exact ingredient costs, current selling price excl. VAT, and number of sales per month. Focus on volume - these dishes have the biggest impact on your profit.
Calculate the current and ideal food cost per dish
Divide ingredient costs by selling price excl. VAT for current food cost. Then calculate the minimum selling price at 30% food cost: ingredient costs ÷ 0.30.
Multiply the difference by your monthly sales
Subtract current margin from new margin per dish. Multiply this difference by the number of sales per month. Add up all dishes for your total extra earnings per month.
✨ Pro tip
Audit your top 10 dishes every 8 weeks for food cost creep - you'll typically find 2-3 items that have drifted above 35% due to supplier price increases. This single habit can protect €3,000-5,000 in annual profit.
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
What if customers stop coming after a price increase?
Test with 1-2 dishes first and monitor for 2 weeks. Price increases of €2-3 often go unnoticed by customers. For larger increases, spread them across several months.
Do I have to make all dishes more expensive at once?
No, start with your least popular underpriced dishes. If those perform well, then adjust your popular dishes. Spread changes over 2-3 months.
How do I know if my new prices are still competitive?
Check comparable dishes at 3-5 restaurants in your area. As long as you're within 10-15% of their prices, you're usually still competitive.
What if I calculated ingredient costs incorrectly?
Recalculate everything immediately. An error of €1 per dish can affect your calculation by thousands of euros. Include all ingredients, even oil and spices.
Can I also reduce portions instead of raising prices?
Yes, a 10% smaller portion gives 10% lower ingredient costs. But don't announce this - customers often don't notice smart portion reductions.
Should I adjust prices during peak season or slow periods?
Implement increases during steady periods, not during your busiest or slowest times. Mid-season timing gives you clearer data on customer response without seasonal variables affecting results.
📚 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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