A €32 pasta carbonara with 25% off drops your margin by €7.34 per plate. Fixed costs like rent and staff don't shrink with your discount, but many restaurant owners forget this until it's too late. Here are five proven ways to save your margins without driving customers away.
Why discounts destroy your food cost
Your food cost gets calculated on your actual selling price, not your regular menu price. Give 25% off a dish that costs €32? Your selling price becomes €24, but ingredient costs stay exactly the same.
💡 Example:
Pasta carbonara normally €32 (excl. VAT €29.36)
- Ingredient costs: €9.00
- Normal food cost: 30.6%
- With 25% discount: selling price €22.02 excl. VAT
- Food cost with discount: €9.00 / €22.02 = 40.9%
You lose €7.34 margin per plate!
Option 1: Limit discounts to specific dishes
Rather than blanket discounts, only discount dishes with low food costs. This maintains your average margin across the menu.
- Analyze your food cost per dish: which ones sit under 25%?
- Target those for promotions: 20% off all pizzas, never steaks
- Market strategically: "This week 20% off all pizzas"
⚠️ Watch out:
Dishes with fresh fish or premium meat often already hit 35% food cost. Never discount those.
Option 2: Raise your normal prices before discounting
Retailers use this tactic constantly. You bump menu prices by 15-20%, then offer "discounts" back to your original level.
💡 Example:
Steak was €32, raise to €38
- "Promotion price" €30.40 (20% off €38)
- Guest thinks: discount of €7.60
- You earn: €1.60 more than normal
This works if you raise prices 3-4 weeks before your promotion, so customers adjust to the new baseline. Something most kitchen managers discover too late: guests need time to forget old prices.
Option 3: Change your promotion format
Instead of price discounts, offer benefits that cost you less but feel valuable:
- Free side dish: costs you €2 in ingredients, feels like €8 value
- Complimentary drink: wine costs you €3, guest perceives €12 value
- Second course half price: spreads discount across multiple sales
- Loyalty programs: "10th meal free" equals 10% discount, but spread over time
Option 4: Temporary menu changes
Create cheaper dishes specifically for promotions that still appear premium to guests.
💡 Example promotion dish:
"Pulled pork burger" for €18 (normally €22)
- Pork shoulder: €4.50 per portion
- Bun, fries, garnish: €3.00
- Total food cost: €7.50 on €16.51 excl. VAT = 45.4%
Appears expensive to customers, but food cost stays manageable through cheaper cuts.
Option 5: Boost your average ticket
Offset lower margins by encouraging customers to spend more per visit:
- Appetizer + main combos: €35 for both courses
- Wine-food pairings: wine delivers 80% margins
- Add dessert for €5: costs you €1.50, compensates main course losses
Knowing when to stop promotions
Track these metrics weekly:
- Average food cost: anything above 38% becomes risky
- Total operating margin: food cost + labor + fixed costs shouldn't exceed 85%
- Cash flow: can you still pay suppliers on time?
⚠️ Watch out:
Promotions running longer than 6 weeks become the "normal price" in customers' minds. Then it's nearly impossible to return to original pricing.
Food cost tracking tools like KitchenNmbrs show you exactly what each discount does to your margins, so you can make informed decisions about which promotions actually generate profit.
How do you calculate the impact of discounts? (step by step)
Calculate your current food cost per dish
Add up all ingredient costs and divide by your selling price excl. VAT. For example: €9 ingredients / €29.36 = 30.6% food cost.
Calculate food cost with discount
Take your new selling price after discount (excl. VAT) and divide your ingredient costs by it. With 25% discount: €9 / €22.02 = 40.9% food cost.
Calculate the margin loss per portion
Subtract your new margin from your old margin. €29.36 - €9 = €20.36 old margin. €22.02 - €9 = €13.02 new margin. Loss: €7.34 per plate.
✨ Pro tip
Track your top 5 promotion dishes over the next 30 days - if more than 2 have food costs above 35%, switch to value-add promotions (free appetizer, wine pairing) instead of price discounts. You'll maintain margins while guests still feel they're getting a deal.
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 give discounts without destroying my food cost?
Absolutely, by only discounting dishes with food costs under 25% or raising normal prices first. You can also offer value-adds like free sides instead of price cuts.
What's an acceptable food cost during promotions?
Your food cost can temporarily hit 40-45%, but never for more than 4-6 weeks. Keep your average food cost across all dishes under 35% through strategic promotion choices.
How do I know if promotions are still profitable?
Monitor total margins weekly: food cost + labor + fixed costs. If this exceeds 85% of sales, you're losing money. Also verify your cash flow stays positive.
What if competitors are running heavy discounts too?
Focus on added value rather than price wars: superior service, unique dishes, or bundles like main course + drink. Price wars rarely benefit anyone long-term.
How long should I run promotions?
Six weeks maximum. After that, guests view discounted prices as normal and returning to regular pricing becomes extremely difficult.
Should I discount my signature dishes during slow periods?
Never discount signature dishes with high food costs. Instead, create temporary menu items with cheaper ingredients that still look premium to guests.
📚 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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