An iconic dish that runs at a loss is one of the toughest decisions in hospitality. It's in your DNA, guests ask for it, but every time you serve it you lose money. In this article you'll learn step by step how to make this decision rationally without losing your concept.
Why iconic dishes often run at a loss
Iconic dishes usually don't come about because of their profitability, but because of their story, tradition, or unique flavor. The problem: ingredients get more expensive, but the dish stays the same.
💡 Example:
Your grandma's beef stew has been on the menu for 15 years at €18.50. Ingredients have gotten 40% more expensive:
- Beef: was €12/kg, now €18/kg
- Vegetables: was €2.50, now €3.20
- Total cost per portion: €8.40
Food cost: 50.3% - way too high for profitability
Calculate the real impact on your business
Before you make a decision, you need to know what this dish really costs you. Not just the ingredients, but the total impact on your profitability.
- Current food cost: Divide ingredient costs by selling price excl. VAT
- Loss per portion: Calculate the difference with your target food cost (usually 28-35%)
- Annual impact: Multiply by number of portions sold
💡 Calculation example:
Beef stew €18.50 (€16.97 excl. VAT), cost price €8.40:
- Current food cost: 49.5%
- Target food cost: 30%
- Loss per portion: €3.31
- Sales: 3x per week × 52 weeks = 156 portions
Annual loss: €516 on one dish
Three scenarios for your iconic dish
You have three options. Each has pros and cons for your operations and brand identity.
Scenario 1: Raise the price to a profitable level
Calculate what the dish would need to cost to be profitable. At 30% food cost and €8.40 ingredients: €8.40 ÷ 0.30 = €28.00 excl. VAT = €30.52 incl. VAT.
⚠️ Watch out:
A €12 price increase on one dish will be immediately noticed by guests. This can damage your image as an affordable establishment.
Scenario 2: Adapt the dish without losing its character
Look for ways to lower the cost price without losing the story:
- Smaller portion: 200g meat instead of 250g saves €3.60 per portion
- Cheaper meat cuts: Stewing meat instead of beef chuck
- More vegetables, less meat: Increase the share of carrots and potatoes
- Seasonal: Only in winter when ingredients are cheaper
Scenario 3: Keep the dish as a loss leader
Accept the loss, but compensate for it strategically:
- Limited availability: Only on Sunday or as a daily special
- Upselling: Combine with profitable side dishes or drinks
- Marketing tool: Use the dish to bring guests in for other purchases
💡 Example loss leader strategy:
Offer the beef stew only on Sunday with mandatory side dishes:
- Beef stew: €18.50 (loss €3.31)
- Mandatory salad: €4.50 (profit €2.80)
- Recommended wine: €6.50 per glass (profit €4.20)
Net profit per combination: €3.69
Factor in the emotional side
Numbers are important, but in hospitality it's also about feeling and story. Ask yourself these questions:
- How many guests come specifically for this dish?
- Do they order other things when they're here?
- Is this dish part of your unique selling point?
- What happens to your reputation if you remove it?
⚠️ Watch out:
A dish that loses €500 per year but generates €5000 in other sales is actually highly profitable.
How to communicate your decision
Whichever choice you make, communication is crucial. Guests don't like surprises, but they do understand honesty.
- With price increase: "Due to rising ingredient costs, we need to adjust the price to maintain quality"
- With recipe change: "We've refined the recipe with seasonal vegetables"
- With limited availability: "From now on only on Sunday, as befits such a special dish"
- With removal: "We're making room for new seasonal specials"
How do you decide about your iconic loss-making dish? (step by step)
Calculate the real costs
Add up all ingredient costs and divide by your selling price excl. VAT. Calculate how much loss you're making per portion compared to your target food cost of 30%.
Measure the total impact
Multiply the loss per portion by the number of portions sold per year. Also add up how much revenue this dish indirectly generates through other orders.
Test your three options
Calculate what it costs to adjust the price, modify the recipe, or keep it as a loss leader. Choose the option that fits both your concept and your numbers.
✨ Pro tip
Keep track of how many guests come specifically for this dish and what else they order. A dish that loses €3 but generates €15 in drinks and desserts is actually highly profitable.
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 keep a dish that has 50% food cost?
Only if it generates other revenue or is part of your unique concept. Always calculate the total impact on your business results, not just the food cost of that one dish.
How do I explain to guests that their favorite dish is getting more expensive?
Be honest about rising ingredient costs and emphasize that you want to maintain quality. Give guests time to adjust by announcing the increase in advance.
What if guests get upset because I'm changing the dish?
Explain that you want to keep the story alive but also need to stay profitable. Many guests understand that a restaurant is also a business that needs to make a profit.
Is it better to remove a loss-making dish or adapt it?
That depends on how much the dish means to your concept. If it's your unique selling point, adapt it. If it's just an old dish, you're better off replacing it.
How much loss per dish is acceptable?
As a loss leader, 1-2% of your total revenue on loss-making dishes can be acceptable, as long as they generate other revenue. More than that becomes dangerous for your profitability.
📚 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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