Managing dual suppliers is like juggling two different currencies for the same ingredient - it ensures quality backup but complicates your cost calculations. You're dealing with varying purchase prices for identical products, directly impacting your dish profitability. Here's how to calculate margins accurately and choose the right approach.
Why two suppliers for one ingredient?
Many restaurant owners deliberately work with multiple suppliers for critical ingredients. This has solid reasons:
- Supply security: if one supplier fails, you've got backup
- Quality comparison: you can choose the better option per delivery
- Negotiating power: suppliers know they're competing
- Seasonal differences: one supplier excels in winter, the other in summer
But this complicates your cost calculations. You can't work with one fixed price anymore.
The three methods for margin calculation
There are three approaches to handle this, each with trade-offs:
Method 1: Weighted average purchase price
You calculate the average of both suppliers, weighted by purchase volume from each.
💡 Example average price:
You buy salmon from two suppliers:
- Supplier A: €22/kg (60% of your purchases)
- Supplier B: €26/kg (40% of your purchases)
Calculation: (€22 × 0.60) + (€26 × 0.40) = €13.20 + €10.40 = €23.60/kg
Weighted average: €23.60/kg
Method 2: Highest supplier price as baseline
You always calculate using the most expensive option. This creates a safety buffer but might price you out of the market.
💡 Example highest price:
Same salmon suppliers:
- Supplier A: €22/kg
- Supplier B: €26/kg
Calculation price: €26/kg (always highest)
Method 3: Real-time cost tracking
You track which supplier you're using for each delivery and adjust costs accordingly. Most accurate, but demands more paperwork.
Margin calculation per method
Each approach yields different margins. Here's the breakdown:
💡 Example margin variance:
Salmon dish, selling price €32.00 (€29.36 excl. VAT), 200g salmon per portion:
- Method 1 (average €23.60): €4.72 per portion → 16.1% food cost salmon
- Method 2 (highest €26.00): €5.20 per portion → 17.7% food cost salmon
- Method 3 (supplier A): €4.40 per portion → 15.0% food cost salmon
- Method 3 (supplier B): €5.20 per portion → 17.7% food cost salmon
Gap between cheapest and priciest: 2.7 percentage points
Something most kitchen managers discover too late: that 2.7% difference compounds across hundreds of dishes monthly, potentially costing thousands in missed profit or overpriced menu items.
Which method fits your operation?
The right choice depends on your circumstances:
- Method 1 (weighted average): If you buy from both suppliers regularly in predictable ratios
- Method 2 (highest price): If you prefer certainty and can absorb slightly higher menu prices
- Method 3 (real-time): If you've got time for detailed tracking and want pinpoint accuracy
⚠️ Critical point:
Pick one method and stick with it. Jumping between approaches makes your data unreliable and period comparisons meaningless.
Practical implementation
Whatever method you choose, track these details:
- Purchase prices per supplier per date
- Which supplier you're using for each delivery
- Quality differences between suppliers
- Delivery reliability and timing per supplier
Food cost calculators let you record multiple suppliers per ingredient and select which price drives your calculations. This makes method switching easier if your situation evolves.
How do you calculate margin with two suppliers? (step by step)
Gather all purchase prices
Note the current prices from both suppliers for the same ingredient. Also keep track of what percentage of your total purchases you normally do with each supplier.
Choose your calculation method
Decide whether you work with average price, highest price, or dynamic prices per delivery. Choose the method that best fits your administration and desired accuracy.
Calculate your ingredient costs per portion
Multiply your chosen price by the quantity per portion. Add this to your other ingredients for the total cost price of the dish.
Check your food cost percentage
Divide your total ingredient costs by your selling price excl. VAT and multiply by 100. Check if this falls within your desired margin (usually 28-35%).
Update your prices regularly
Check monthly whether the prices from both suppliers are still correct. Adjust your calculation price if large differences emerge or if your purchase ratio changes.
✨ Pro tip
Start with weighted averages for your top 12 ingredients by cost impact - this captures 80% of your food cost variance without overwhelming your team with paperwork. Switch to real-time tracking only after you've mastered the basics.
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 recalculate my weighted average after every delivery?
Not necessarily - monthly recalculations work for most operations. But if a supplier changes prices significantly or your purchase ratio shifts dramatically (like from 60/40 to 80/20), recalculate immediately.
What if one supplier's quality varies drastically week to week?
You might need separate recipe versions or menu items for each quality level. Inconsistent quality often means you're not dealing with the same ingredient anymore, so separate costing makes sense.
Can I mix methods for expensive versus cheap ingredients?
Absolutely - use real-time tracking for your priciest proteins and weighted averages for herbs and spices. Just stay consistent within each ingredient category once you decide.
📚 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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