The minimum selling price determines whether your new dish is profitable. Many restaurants launch new dishes without calculating the cost price exactly, causing them to lose money unknowingly. In this article, you'll learn step-by-step how to calculate the right minimum price for each new dish.
Why calculate minimum selling price?
Every dish has a minimum price to break even. If you go below it, you lose money on every portion sold. If you go too high, nobody buys it. The art is finding the sweet spot.
⚠️ Note:
Always calculate with your selling price excluding VAT. The price on your menu is including 9% VAT, but for cost price calculations you use the price without VAT.
The basic formula for minimum selling price
The formula is simple:
Minimum selling price (excl. VAT) = Ingredient costs ÷ (Desired food cost % ÷ 100)
Then multiply by 1.09 for the price including VAT on your menu.
💡 Example:
You're developing a new pasta with the following costs:
- Pasta: €0.80
- Chicken: €3.20
- Vegetables: €1.40
- Sauce: €1.10
- Cheese: €0.90
Total ingredient costs: €7.40
At 30% desired food cost: €7.40 ÷ 0.30 = €24.67 excl. VAT
Menu price: €24.67 × 1.09 = €26.89
Choose your desired food cost percentage
This depends on your restaurant type and concept:
- Fine dining: 28-32%
- Casual dining: 28-35%
- Bistro/brasserie: 25-32%
- Fast casual: 25-30%
Start conservatively. You can always lower the price if the dish performs well, but raising it is harder.
Calculate all ingredient costs exactly
Add up everything that goes on the plate:
- Main ingredients (meat, fish, vegetables)
- Side dishes and garnishes
- Sauces and dressings
- Oil and butter for cooking
- Herbs and spices
- Plate decoration
💡 Example trimming loss:
You buy whole salmon for €18/kg, but after filleting you have 60% left.
Actual fillet price: €18 ÷ 0.60 = €30/kg
Calculate with €30/kg, not €18/kg!
Test and adjust your price
Start with your calculated minimum price and monitor:
- How many do you sell per week?
- What do guests say about the price-quality ratio?
- How does it perform versus other dishes?
If the dish performs well, you can raise the price slightly. If it performs poorly, first check if the taste is right before lowering the price.
⚠️ Note:
Never go below your calculated minimum price. You'll definitely lose money on every portion sold, even if the dish seems popular.
Account for seasonal variations
Ingredient prices fluctuate throughout the year. Therefore, calculate your minimum price using:
- Average annual price of seasonal products
- Or the highest seasonal price (safer)
This prevents your dish from suddenly becoming unprofitable in winter.
How do you calculate the minimum selling price? (step by step)
Calculate exact ingredient costs
Add up all costs: main ingredients, garnishes, sauces, oil, herbs and decoration. Don't forget trimming loss - calculate with actual price per kilo after processing.
Choose your desired food cost percentage
For casual dining: 28-35%, for fine dining: 28-32%. Start conservatively - you can always lower it, but raising it is harder.
Calculate minimum price with formula
Divide ingredient costs by food cost percentage: €8 ÷ 0.30 = €26.67 excl. VAT. Multiply by 1.09 for menu price: €29.07.
✨ Pro tip
Recalculate the minimum price for your 5 most popular dishes. Often these are priced too low, causing you to miss out on a lot of profit.
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
Should I include VAT in my cost price calculation?
No, always calculate with prices excluding VAT. Add VAT only for the final price on your menu. This prevents your food cost from appearing lower than it actually is.
What if my calculated price seems too high for my concept?
First check your ingredient costs - can you use cheaper alternatives? Or make the portion slightly smaller. Never go below your minimum price, you'll definitely lose money.
How often should I recalculate my minimum price?
Check monthly whether your suppliers have raised prices. For seasonal products, it's best to calculate with average annual prices to avoid surprises.
Can I use different food cost percentages per dish?
Yes, that's smart. Signature dishes can have lower food cost (higher margin), while popular dishes can have slightly higher food cost for better price-quality ratio.
What if my competitor sells the same dish cheaper?
Focus on your own numbers. Maybe they have lower purchase prices, different portion sizes, or they're losing money on that dish. Never go below your break-even price.
📚 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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