Purchase prices fluctuate constantly. Meat gets more expensive, vegetables cheaper, oil rises again. If your menu price doesn't move with it, your profit evaporates without you noticing. In this article you'll learn how to calculate the risk of price fluctuations and adjust your menu price accordingly.
Why calculate purchase price risk?
Many restaurant owners set their menu price and leave it for months. Meanwhile, suppliers raise their prices by 10%, 15%, sometimes 20%. Your food cost goes up, but your selling price doesn't.
⚠️ Watch out:
A 15% increase in purchase prices can bring your food cost from 30% to 35%. On an annual turnover of €500,000 you lose an extra €25,000.
The basic formula for price risk
You calculate the risk by looking at the impact of price increases on your food cost percentage:
New food cost % = (Old ingredient costs × (1 + price increase %)) / Selling price excl. VAT × 100
💡 Example:
Your steak has ingredient costs of €9.00 and sells for €32.00 incl. VAT (€29.36 excl.):
- Current food cost: €9.00 / €29.36 × 100 = 30.7%
- Meat price increases by 20%: €9.00 × 1.20 = €10.80
- New food cost: €10.80 / €29.36 × 100 = 36.8%
Impact: +6.1 percentage point food cost
Risk analysis per ingredient
Not all ingredients are equally risky. Make a distinction between:
- Main ingredients: Meat, fish - biggest impact on cost price
- Basic ingredients: Oil, butter, flour - small impact per portion, but used in many dishes
- Specialties: Truffles, oysters - high price, but limited number of dishes
Focus your risk calculation on ingredients that cost more than €2.00 per portion. That's where the biggest impact is.
Include seasonal risk
Some products have predictable fluctuations:
- Tomatoes: Expensive in winter (+40%), cheap in summer
- Asparagus: Seasonal product, price drops during season
- Shellfish: More expensive around holidays
💡 Example seasonal impact:
Your tomato soup in January vs. August:
- January: €3.20 ingredient costs (expensive tomatoes)
- August: €2.10 ingredient costs (cheap tomatoes)
- Selling price: €8.50 (€7.80 excl. VAT)
Food cost January: 41% | Food cost August: 27%
Spread supplier risk
Work with multiple suppliers for critical ingredients. If one supplier raises their prices by 25%, you can temporarily switch to another.
Calculate the difference between your most expensive and cheapest supplier per ingredient. This gives you the margin within which you can switch.
💡 Example supplier difference:
Beef per kilo:
- Supplier A: €28.00/kg
- Supplier B: €31.50/kg
- Difference: €3.50/kg = 12.5%
At 200g per portion this saves €0.70 per dish.
When to adjust menu price?
Set a threshold for price adjustments. Many restaurants follow this rule:
- Food cost above 35%: Raise menu price or adjust recipe
- Food cost between 32-35%: Keep an eye on it
- Food cost below 32%: Room for better ingredients or higher margin
Alternative ingredients as a buffer
Always have an alternative ready for expensive ingredients:
- Salmon fillet too expensive? Switch to sea bream
- Beef prices rising? Promote pork dishes
- Lobster unaffordable? Use langoustines
Calculate the food cost of these alternatives in advance, so you can switch quickly.
Digital help with price monitoring
Manually tracking all purchase prices takes a lot of time. A system like KitchenNmbrs keeps track of your ingredient prices and automatically calculates the impact on your food cost when prices change.
You immediately see which dishes exceed your desired food cost and can quickly decide on price adjustments.
How do you calculate purchase price risk? (step by step)
Inventory your main ingredients
Make a list of all ingredients that cost more than €2.00 per portion. These are your risk ingredients. Note the current purchase price and consumption per dish.
Calculate the impact of price increases
For each risk ingredient, assume a price increase of 15%. Calculate the new ingredient costs and the new food cost percentage. Use the formula: (new ingredient costs / selling price excl. VAT) × 100.
Set action thresholds
Determine at what food cost percentage you take action. For example: above 35% you adjust the menu price, between 32-35% you look for alternatives. Make this clear to yourself in advance.
✨ Pro tip
Keep a 'risk spreadsheet' with your top 10 most expensive ingredients. Update the prices monthly and immediately see which dishes exceed your food cost threshold. This saves you hundreds of euros per month in unnoticed price increases.
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
How often should I check my purchase prices?
Check your main ingredients at least monthly and seasonal products weekly. Suppliers often raise prices quietly, so regular checks prevent surprises.
What if my supplier suddenly charges 30% more?
Switch immediately to an alternative supplier or temporarily replace the ingredient with a cheaper alternative. Calculate in advance what options you have in case of extreme price increases.
Should I adjust my menu price immediately when prices increase?
Not always. If your food cost goes from 30% to 32%, you still have margin. Adjust your menu price when your food cost exceeds 35% or when your profit margin comes under too much pressure.
How do I prevent guests from being shocked by price increases?
Increase gradually and communicate honestly about rising costs. Many guests understand that ingredients become more expensive. It's better to raise €1.50 at a time than €4.00 all at once.
Can I make contracts with fixed prices?
With large suppliers sometimes, but usually for a limited period (3-6 months). For small businesses this is often not possible. Focus on multiple suppliers and flexibility in your menu.
📚 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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