A 15% price increase on a core product directly impacts your profitability. Many restaurant owners wait too long to adjust, losing money for months. In this article, you'll learn step-by-step how to quickly calculate what a price increase means and how to smartly adjust your menu price.
Calculate the impact on your food cost
Before you adjust your menu price, you need to know how much the price increase affects your food cost. A 15% increase in one ingredient doesn't automatically mean 15% higher total costs.
💡 Example:
Your €28.00 steak has these ingredients:
- Beef (200g): €6.00 → becomes €6.90 (+15%)
- Vegetables: €1.50
- Sauce and garnish: €1.00
Old total costs: €8.50
New total costs: €9.40 (+€0.90)
In this example, your total ingredient costs increase by €0.90, not 15%. That's a 10.6% increase in your total food cost.
Three options for price adjustment
You have three options to respond to higher purchase prices:
- Full pass-through: Increase your menu price by the full amount
- Partial pass-through: Cover part of the cost yourself
- Recipe adjustment: Change the dish to manage costs
Option 1: Full pass-through
You maintain the same food cost by passing the full cost increase through to your selling price.
💡 Calculation:
Extra costs: €0.90 per portion
At 9% VAT: €0.90 × 1.09 = €0.98
New menu price: €28.00 + €0.98 = €28.98
Advantage: Your margin stays the same. Disadvantage: Guests see a price increase.
Option 2: Partial pass-through
You cover part of the cost increase yourself to limit the price increase for guests.
💡 Example:
You increase by €0.50 instead of €0.98:
- New menu price: €28.50
- You cover €0.48 yourself
- Food cost increases from 30.4% to 32.1%
⚠️ Watch out:
Check if your new food cost still falls within your limits. Above 35% becomes risky for your profitability.
Option 3: Recipe adjustment
Adjust your recipe to absorb the cost increase without raising prices.
- Reduce portion size: From 200g to 180g beef (-10%)
- Replace ingredient: Swap expensive meat for a cheaper alternative
- Change composition: More vegetables, less meat
💡 Example portion adjustment:
180g beef instead of 200g:
- Beef (180g): €6.21 instead of €6.90
- Total costs: €8.71 instead of €9.40
- Cost increase: only €0.21
Timing of price adjustments
Don't wait too long to adjust. Every week you delay costs you money.
💡 Impact calculation:
At 50 portions per week and €0.90 extra costs:
- Per week: €45 less profit
- Per month: €195 less profit
- Per year: €2,340 less profit
Communication with guests
If you raise prices, be transparent but not defensive:
- Explain that ingredient quality comes first
- Avoid the word 'unfortunately' - it sounds weak
- Focus on value: 'We continue to work with the best ingredients'
Explore alternatives
Before you adjust, check if there are alternatives:
- Different supplier: Compare prices from 2-3 suppliers
- Different product: Similar quality for a lower price
- Seasonal alternatives: Temporary replacement until prices drop
⚠️ Watch out:
Don't constantly change suppliers for a few cents. Reliability and quality are often more important than the lowest price.
How do you calculate your new menu price? (step by step)
Calculate the new ingredient costs
Add up all ingredients with the new prices. Only the core product has become 15% more expensive, the rest stays the same. Calculate what your new total ingredient costs per portion are.
Determine your desired food cost percentage
Decide if you want to maintain the same food cost (full pass-through) or are willing to accept a higher food cost (partial pass-through). Check that you don't exceed 35% food cost.
Calculate the new menu price
Divide your new ingredient costs by your desired food cost percentage. Multiply by 1.09 for 9% VAT. This is your new minimum menu price including VAT.
✨ Pro tip
Check every supplier invoice to see if prices have increased. Many entrepreneurs only notice this after weeks, causing them to unknowingly run losses. A system like KitchenNmbrs automatically alerts you if your food cost exceeds your target percentage.
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
Should I immediately raise my price if my supplier becomes more expensive?
Not necessarily immediately, but don't wait too long. First check if other suppliers have better prices. If the increase is structural, adjust within 2-4 weeks to limit losses.
Is it better to reduce my portion size than to raise my price?
It depends on your guests and concept. At fine dining, a smaller portion is more noticeable. At casual dining, you can often reduce by 10-15% without guests noticing, as long as you present it well.
How often can I adjust my prices without annoying guests?
Maximum 2-3 times per year for regular adjustments. With major cost increases (15%+), guests expect an interim adjustment. Communicate transparently about why you're adjusting.
What if my competitor doesn't raise their prices?
Look at your own numbers, not your competitor's. Maybe they have different suppliers, lower quality, or are deliberately taking losses. Focus on your own profitability.
Should I include VAT in my calculation of the new price?
Yes, always. You first calculate your minimum selling price excluding VAT, then multiply by 1.09 (at 9% VAT) for the final menu price.
📚 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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