Auction purchasing can significantly affect your margins because your price is unpredictable. Many hospitality entrepreneurs buy fish or meat through auctions for the best quality, but calculate incorrectly. In this article you'll learn how to maintain a stable margin despite fluctuating purchase prices.
Why auction purchasing is tricky for your margin
With auction purchasing, you don't know in advance what you'll pay. The price depends on supply, season, and competition between buyers. This makes margin calculation complex.
⚠️ Watch out:
Many restaurants calculate with an average purchase price, but forget that auction prices sometimes run 40% higher than expected.
Calculate your margin with fluctuating purchase prices
For auction products you use a different approach than with fixed suppliers. You work with a price range instead of fixed prices.
💡 Example: Dover sole from fish auction
Menu price: €42.00 incl. VAT (€38.53 excl.)
- Lowest auction price: €18/kg
- Average price: €24/kg
- Highest price: €32/kg
- Portion: 200 grams
At €32/kg: €6.40 per portion = 16.6% food cost
At €24/kg: €4.80 per portion = 12.5% food cost
Three strategies for stable margins
1. Dynamic menu price
Adjust your menu price based on the purchase price of that day. Restaurants with daily specials often do this.
- Check purchase price in the morning
- Calculate minimum selling price for desired margin
- Update menu
2. Average price with buffer
Calculate with the average purchase price plus 20% buffer for outliers.
💡 Example calculation:
Average purchase price: €24/kg
With 20% buffer: €28.80/kg
Portion 200g: €5.76
Minimum selling price at 30% food cost: €19.20 excl. VAT
3. Agree on a maximum price
Agree with your auction partner on a maximum price. You don't buy above that price.
Include trim loss in your calculation
Auction products often arrive unprocessed. Always calculate with the final weight after processing.
💡 Example: Whole fish
Purchase price: €20/kg whole
Trim loss: 45% (head, bones, skin)
Yield: 55%
Actual fillet price: €20 ÷ 0.55 = €36.36/kg
Registration and administration
Keep track of these details with every auction purchase:
- Date and time of purchase
- Purchase price per kg
- Total weight purchased
- Actual yield after processing
- Selling prices that day
With a system like KitchenNmbrs you can track this data daily and automatically calculate your food cost based on actual purchase prices.
⚠️ Watch out:
Auction prices can fluctuate 50% within a week. Check your margins at least 2x per week.
When auction purchasing doesn't pay off
Auction purchasing isn't always cheaper. Calculate when it pays for itself:
- Extra time for processing
- Higher trim loss due to varying quality
- Uncertainty about availability
- Higher labor costs due to more manual work
If your average auction price (including processing time) comes out higher than with your fixed supplier, it's not profitable.
How do you calculate margin with auction purchasing? (step by step)
Collect price data from at least 4 weeks
Record all auction prices for your product over a month. Calculate the lowest, average, and highest price. This gives you a realistic price range.
Calculate actual cost price including trim loss
Divide the average auction price by the yield percentage after processing. At 45% trim loss you divide by 0.55. This is your actual cost price per kg of usable product.
Determine your minimum selling price with buffer
Take the actual cost price plus 20% buffer for outliers. Divide this by your desired food cost percentage. This gives you minimum selling price excl. VAT.
Monitor and adjust weekly
Check your actual purchase prices against your calculation every week. Adjust your menu price if the auction price structurally runs higher or lower than expected.
✨ Pro tip
Only buy at auction products you sell at least 200 portions of per week. With smaller volumes the savings are too small to justify the extra administration.
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
Do I need to adjust my menu price every day based on the auction price?
Not necessarily. Work with an average price plus buffer. Only adjust when there are extreme outliers (30%+ above average) to protect your margin.
How do I prevent overpaying at the auction?
Set a maximum price in advance based on your margin calculation. Never go above it, even for top quality. Better no product than a loss.
Is auction purchasing always cheaper than fixed suppliers?
No, definitely not. Factor in the extra processing time and higher trim loss. Often you pay more in labor than you save on purchasing.
What if I can't buy anything at the auction within my budget?
Always have a backup supplier with fixed prices. Or adjust your menu and offer an alternative dish that fits your margin.
How do I register fluctuating auction prices in my administration?
Record the actual purchase price daily and adjust your recipe costs. Apps like KitchenNmbrs can automatically calculate this into your food cost percentage.
📚 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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