Storage costs are hidden expenses that inflate your food costs beyond purchase prices. Many restaurant owners calculate only the buying price but overlook that bulk orders require space, energy and time to store properly. Understanding these costs helps you make smarter purchasing decisions and price dishes accurately.
What exactly are storage costs?
Storage costs include every expense you face keeping products between purchase and actual use. These encompass direct expenses like refrigeration plus indirect costs such as space allocation and labor time.
- Energy costs: cooling, heating, lighting of storage areas
- Space costs: rent or depreciation of storage areas per square meter
- Labor costs: time spent organizing products, checking inventory, relocating items
- Waste costs: products that spoil during storage periods
- Insurance premium: coverage for inventory and storage facilities
💡 Example:
You purchase 100 kg of frozen fish at €8/kg. This gets stored for 2 months in your freezer before depletion.
- Purchase costs: €800
- Freezer costs (€0.15/kg/month): €30
- Space costs (€0.10/kg/month): €20
- Labor costs (organizing, checking): €15
True costs: €865 = €8.65/kg rather than €8/kg
Which storage costs should you include?
You don't need to track every storage expense. Focus on significant costs that you can control through smarter ordering strategies.
Always include:
- Energy costs for cooling/freezing: typically €0.10-€0.20 per kg monthly
- Waste from spoilage: estimate 2-5% of purchase value for perishable items
- Additional labor: time for organizing, FIFO rotation, inventory checks
Sometimes include:
- Space costs: only if renting dedicated storage facilities
- Insurance: only if maintaining substantial inventory (€5,000+)
- Administrative costs: extra time for detailed inventory tracking
⚠️ Watch out:
Only include storage costs that represent genuine additional expenses. Existing refrigeration for daily products doesn't count toward small order calculations.
How do you factor storage costs into your pricing?
Two approaches exist: percentage of purchase value or amount per kg monthly. The second method provides greater accuracy for cost calculations.
Method 1: Percentage of purchase value
Standard in hospitality: 2-8% of purchase value monthly for storage. Perishable items hit the higher range, shelf-stable products stay lower.
💡 Example percentage method:
You purchase €2,000 worth of dry goods (pasta, rice, canned items) used over 3 months.
- Purchase value: €2,000
- Storage costs: 3% monthly × 3 months = 9%
- Additional costs: €2,000 × 0.09 = €180
True costs: €2,180 rather than €2,000
Method 2: Amount per kg monthly (more accurate)
Calculate actual costs per kg monthly and factor this based on storage duration. After managing kitchen operations for nearly a decade, I've found this method reveals the real impact of bulk purchasing decisions.
- Refrigerated products: €0.15-€0.25 per kg monthly
- Frozen products: €0.20-€0.35 per kg monthly
- Dry storage: €0.05-€0.15 per kg monthly
💡 Example kg method:
You buy 50 kg of beef at €18/kg. You freeze it and consume over 6 weeks.
- Purchase price: €18/kg
- Freezing costs: €0.25/kg monthly × 1.5 months = €0.38/kg
- Waste (2%): €18 × 0.02 = €0.36/kg
Actual cost price: €18.74/kg rather than €18/kg
Impact on your food cost and margins
Storage costs appear minimal but can boost your food cost by 1-3 percentage points. For bulk purchase orders this becomes quite significant.
💡 Impact example:
Restaurant with €400,000 annual revenue frequently buys bulk orders for discounts.
- Food cost without storage costs: 30%
- Food cost with storage costs: 32%
- Difference: 2 percentage points
Annual impact: €400,000 × 0.02 = €8,000 reduced profit
Are large orders still worthwhile?
Bulk orders make sense only if purchase discounts exceed storage costs. Make this trade-off deliberately rather than assuming bigger is always better.
- Purchase discount 10%: nearly always worthwhile, even with storage expenses
- Purchase discount 5%: verify storage costs don't exceed savings
- Purchase discount 2%: typically not worthwhile with extended storage
⚠️ Watch out:
Also consider spoilage risk, flavor degradation, or inability to use products. If uncertain: smaller orders, increased frequency.
Tracking storage costs digitally
With systems like tools for food cost tracking, you can automatically incorporate storage costs into your per-dish cost calculations. You input your true purchase price (including storage expenses) and immediately see the impact on your food cost percentage.
This prevents unknowingly underpricing dishes where you've made bulk purchases requiring extended storage periods.
How do you calculate storage costs? (step by step)
Determine your actual storage costs per month
Add up: energy costs for cooling/freezing, space costs (if separately rented), labor costs for storage tasks, and insurance premium for inventory. Divide this by your average inventory in kg's.
Calculate the storage duration of your purchase order
Realistically estimate how long it takes you to use up the order. Calculate in months: 6 weeks = 1.5 months, 3 months = 3 months. Be honest about your actual consumption.
Factor storage costs into your purchase price
Multiply your storage costs per kg per month by the storage duration. Add this to your purchase price. This is your actual cost price that you should use for food cost calculations.
✨ Pro tip
Calculate storage costs for any bulk order exceeding 45 days of inventory. If storage expenses surpass your bulk discount by more than 1%, switch to smaller, more frequent deliveries instead.
Calculate this yourself?
In the KitchenNmbrs app you can do this in just a few clicks. 7 days free, no credit card.
Was this article helpful?
Frequently asked questions
How much storage costs should I calculate per kg per month?
For refrigerated products €0.15-€0.25, frozen products €0.20-€0.35, and dry storage €0.05-€0.15 per kg monthly. This varies based on your energy costs and storage conditions.
Do I need to factor in storage costs for small orders?
For orders consumed within 2 weeks, skip storage cost calculations. The administrative time will exceed any savings you'd gain.
How do I factor in waste from spoilage in storage costs?
Calculate 2-5% of purchase value for perishable products stored longer than a month. For dry goods, spoilage waste is typically negligible.
Should I include my existing kitchen rent in storage cost calculations?
Only include space costs if you're renting separate storage facilities or if large inventory restricts your kitchen workspace. Fixed kitchen rent doesn't count as storage cost.
What's the break-even point between bulk discounts and storage costs?
Bulk orders become unprofitable if monthly storage costs exceed the purchase discount percentage. At 3% discount with 4% monthly storage costs, you're losing money.
How do I calculate storage costs for items with different shelf lives?
Apply storage costs only for the actual storage duration before use. A 6-month shelf life product used in 2 months gets charged for 2 months of storage, not 6.
Can seasonal price fluctuations justify higher storage costs?
Yes, if you're buying before price increases that exceed your total storage costs. Calculate the expected price rise against storage expenses plus spoilage risk to determine if it's profitable.
📚 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.
Optimize your purchasing with data
Know exactly which supplier is most cost-effective and how price changes affect your margins. KitchenNmbrs links purchasing directly to recipe costs. Try it free for 14 days.
Start free trial →