Your trusted supplier calls on Tuesday morning with news that'll hit your margins hard. They're shutting down operations in three weeks, and you need alternatives fast. The replacement quotes you're getting are 20-30% higher, but here's exactly how to calculate what this means for your dish profitability.
Calculate the difference in ingredient costs
Start with the exact cost difference between your old and new supplier. Don't just count the main ingredients, but also any changes in quality, packaging, or minimum orders.
💡 Example:
Your old supplier delivered organic chicken breast for €12.50/kg. They're closing.
- New supplier A: €15.80/kg (same quality)
- New supplier B: €13.20/kg (slightly lower quality)
- Difference: +€3.30 or +€0.70 per kg
Per 200g portion: +€0.66 or +€0.14
Recalculate your food cost percentage
With the new ingredient price, your food cost changes. Use this formula to see if your dish is still profitable:
Food cost % = (New ingredient costs / Selling price excl. VAT) × 100
💡 Example:
Your chicken dish now costs €8.50 in ingredients (was €7.84). Selling price: €26.50 incl. VAT.
- Selling price excl. VAT: €26.50 / 1.09 = €24.31
- Old food cost: (€7.84 / €24.31) × 100 = 32.2%
- New food cost: (€8.50 / €24.31) × 100 = 35.0%
Your food cost rises from 32% to 35% - still acceptable
⚠️ Watch out:
If your food cost goes above 38%, you're probably losing money on that dish. Then you need to adjust your price or find a cheaper alternative.
Determine your new minimum selling price
If your food cost becomes too high, calculate what you need to charge at minimum to stay profitable. Stick to your desired food cost percentage (usually 28-35%).
Minimum price excl. VAT = New ingredient costs / (Desired food cost % / 100)
💡 Example:
You want to keep food cost at maximum 33% with €8.50 ingredient costs.
- Minimum price excl. VAT: €8.50 / 0.33 = €25.76
- Minimum price incl. VAT: €25.76 × 1.09 = €28.08
- Your current price: €26.50
You need to raise your price to €28.00 to maintain your margin
Consider alternatives to price increases
A price increase isn't always possible. These alternatives can also work:
- Adjust portion size: 180g instead of 200g chicken breast saves €0.33 per plate
- Change side dishes: Cheaper vegetables or less expensive garnish
- Adjust the recipe: Replace part of the chicken with vegetables or grains
- Make a quality choice: Slightly lower quality at a lower price
I've seen restaurants ignore supplier closures until the last minute - a mistake that costs the average restaurant EUR 200-400 per month in lost margins. But you're calculating ahead, which puts you in control.
Monitor your new margin weekly
Keep a close eye on your new numbers. Suppliers can increase prices further, and you don't want to be caught off guard again.
⚠️ Watch out:
Check your other dishes with ingredients from the same supplier. Often you use multiple products from one supplier without realizing it.
How do you calculate the new margin? (step by step)
Compare the new ingredient price
Calculate the exact cost difference per portion between your old and new supplier. Don't forget to include minimum orders, delivery costs, and quality differences.
Recalculate your food cost percentage
Use the formula: (New ingredient costs / Selling price excl. VAT) × 100. If this goes above 35-38%, your dish becomes unprofitable.
Determine your new selling price
Calculate what you need to charge at minimum: Ingredient costs / (Desired food cost % / 100). Don't forget to add VAT back on for your menu price.
✨ Pro tip
Calculate your new margins within 48 hours of getting supplier closure notice, then lock in your replacement supplier within one week. This prevents panic buying at inflated prices during your final week of stock.
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
Can I just raise my price if my supplier closes?
You can always adjust your price, but watch your guests' reaction. A 5-10% increase usually goes unnoticed, but more than 15% can raise eyebrows.
Do I have to go with the cheapest new supplier?
Not necessarily. Also check reliability, quality, and delivery terms. A slightly more expensive but reliable supplier can work out cheaper in the long run.
What if I can't find an alternative for the same product?
Then you need to adjust your recipe. Replace the ingredient with something similar or modify your dish. Communicate honestly with your guests about the change.
📚 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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