Underpriced dishes cost you money every month. Many restaurant owners don't know how much they're losing due to dishes with too high food cost. In this article, you'll calculate exactly how much extra you earn by correcting your prices.
Why underpriced dishes cost you money
Every dish with a food cost above 35% costs you money. The difference between what you earn now and what you could earn adds up. A dish you sell 50 times a month with €2 too little margin costs you €1,200 per year.
💡 Example:
Your pasta carbonara has a food cost of 42%. At an ideal food cost of 30%, you'd have €3.20 more 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.
Extra margin per plate: €5.15
Step 1: Identify underpriced dishes
Start with your 5 best-selling dishes. These have the biggest impact on your total profit. Calculate the food cost of each dish and check which ones are above 35%.
For each dish you need:
- Exact ingredient costs per portion
- Current selling price excl. VAT
- Number of sales per month
⚠️ Note:
Include all ingredients: main ingredient, garnish, sauces, oil, butter. Even that one cherry tomato counts.
Step 2: Calculate the new minimum price
For each underpriced dish, calculate the minimum selling price at 30% food cost. Use this formula:
Minimum price excl. VAT = Ingredient costs ÷ 0.30
Then multiply by 1.09 for the price incl. 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 selling it for €36.00, you're missing €5.95 per plate.
Step 3: Calculate the total potential
For each dish, calculate how much extra you earn per month. Multiply the difference in margin by the number of sales per month.
Extra profit per month = (New margin - Current margin) × Sales per month
💡 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 extra per month: €995
Per year: €11,940
Practical implementation of price changes
Don't raise all prices at once. Customers notice big changes. Spread price increases over 2-3 months. Start with your least popular dishes to test how guests react.
- Week 1-2: Raise 2 dishes
- Week 3-4: Evaluate sales figures
- Week 5-6: Raise next 2 dishes
Monitor your sales figures. If a dish suddenly sells much less, consider a smaller price increase.
Alternative strategies
Price increases aren't the only solution. You can also:
- Reduce portions: 10% smaller portion = 10% lower ingredient costs
- Cheaper ingredients: Same dish, different supplier or quality
- Adjust the dish: Replace expensive ingredients with cheaper alternatives
⚠️ Note:
Never lower quality without informing your guests. 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
Check your food cost for your top dishes every 3 months. Suppliers regularly raise prices, which causes your food cost to slowly increase without you noticing.
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 first with 1-2 dishes and monitor for 2 weeks. A price increase of €2-3 customers often don't even notice. For larger increases, spread them over several months.
Do I have to make all dishes more expensive at once?
No, start with your least popular underpriced dishes. If those go well, then raise your popular dishes. Spread it 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. 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 communicate this - customers often don't notice if you reduce portions smartly.
📚 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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