Last month, your bacon supplier hit you with a 25% price increase on your bestselling carbonara. Do you raise menu prices immediately, or can you absorb the cost? Most restaurant owners guess wrong and either lose money for months or alienate customers with unnecessary price hikes.
What is the threshold for price adjustment?
The threshold marks the exact point where an ingredient price increase pushes your food cost so high that you're bleeding money on a dish. You calculate this by comparing your maximum food cost percentage with your actual food cost after the price increase.
💡 Example:
Your pasta carbonara runs at 30% food cost. Your supplier jacks up bacon prices by 25%.
- Current ingredient costs: €8.00
- Selling price excl. VAT: €26.67
- Bacon costs: €1.20 (15% of total)
New bacon costs: €1.20 × 1.25 = €1.50
The basic formula for threshold
You calculate your threshold with this formula:
Maximum price increase % = (Maximum food cost % - Current food cost %) / (Ingredient share in total costs × Current food cost %)
Sounds like calculus, but it's actually straightforward once you plug in real numbers.
💡 Example calculation:
Pasta carbonara data:
- Current food cost: 30%
- Maximum food cost (your limit): 35%
- Bacon share in total costs: 15%
Calculation: (35% - 30%) / (0.15 × 30%) = 5% / 4.5% = 111% price increase possible
Practical application per ingredient
For each main ingredient, you can calculate upfront what the maximum price increase is before you need to act. This gives you actual negotiating power with suppliers instead of just hoping for the best.
- Calculate the share of each ingredient in your total costs
- Use the formula for your most critical ingredients
- Create an overview per supplier
- Review this every quarter
⚠️ Note:
This formula works per ingredient. If multiple ingredients spike simultaneously, you add the effects together - the kind of thing you only learn after closing your first month at a loss.
Alternatives to raising menu prices
Passing on a price increase isn't your only move. Sometimes you can respond more strategically:
- Adjust portion size: 10% less meat can slash 3-4% food cost
- Replace ingredient: Find a cheaper alternative with similar taste profile
- Switch supplier: Compare prices with at least 3 suppliers
- Seasonal change: Temporarily pivot to different ingredients
💡 Example alternatives:
Beef prices jump 20%:
- Option 1: Menu price from €32 to €35
- Option 2: Portion from 200g to 180g
- Option 3: Use a blend of beef and pork
Calculate the impact on food cost and guest satisfaction for each option.
Timing of price adjustments
Don't wait until you hit your threshold. Plan price adjustments strategically:
- Seasonal: Raise prices with new menu rollouts
- Gradual: Small increases of 5-8% fly under the radar
- Selective: Start with your least popular dishes
- Communication: Explain why (quality, fresh ingredients)
With tools like KitchenNmbrs, you immediately see the impact of price increases on your food cost and can quickly decide which action makes the most sense.
How do you calculate the threshold? (step by step)
Determine your current food cost per dish
Calculate what each dish currently costs in ingredients and divide this by your selling price excl. VAT. Multiply by 100 for the percentage.
Set your maximum food cost
Determine at what food cost percentage you still make a profit. For most restaurants this is around 35%. This is your absolute limit.
Calculate the share of each ingredient
Divide the costs of each main ingredient by your total ingredient costs. Bacon that costs €1.20 on €8.00 total = 15% share.
Apply the threshold formula
Use: (Max food cost % - Current food cost %) / (Ingredient share × Current food cost %). This gives you the maximum price increase percentage.
Create an action plan per threshold
Note for each ingredient at what price increase you need to take action. This way you can respond quickly to supplier announcements.
✨ Pro tip
Calculate thresholds for ingredients that represent more than 12% of your total food cost within 48 hours of any price notification. You'll catch 85% of potential profit leaks before they happen.
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
What if multiple ingredients become more expensive at the same time?
Add the effects together. If both meat and vegetables jump 15%, you calculate the effect for both and combine them for the total food cost impact. This can push you over your threshold fast.
Can I also use the threshold for seasonal ingredients?
Yes, but account for natural price fluctuations. Asparagus always costs more outside its season - that's normal market behavior and doesn't necessarily require a price adjustment.
What if my supplier suddenly demands 50% more for an ingredient?
With extreme increases, you first explore alternatives: different supplier, replacement ingredient, or temporarily pull the dish from your menu. Only as a last resort do you raise menu prices drastically.
📚 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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