You've run the numbers and your stomach drops – you've been selling at a loss for years. Your food costs hit 45% while competitors maintain healthy 30-32% margins. Now you're facing the dreaded price correction conversation.
First, check how much you've been underpricing
Before raising anything, calculate exactly where you stand. Pull your 10 bestsellers and run the real numbers.
💡 Example:
Pasta carbonara, selling price €18.50 (incl. 9% VAT):
- Selling price excl. VAT: €16.97
- Ingredient costs: €7.50
- Actual food cost: 44.2%
Target food cost: 30% → minimum price €25.00 excl. VAT = €27.25 incl.
That's an €8.75 jump per plate. Way too aggressive for one move.
The phased approach
Don't shock customers with 40% increases overnight. You'll empty your dining room. Break it into manageable phases:
- Phase 1: Bump prices 15-20% over 2-3 months
- Phase 2: Tweak recipes to slash ingredient costs
- Phase 3: Another 10-15% increase after 6 months
⚠️ Note:
Skip the blanket percentage increases. Your signature dishes can handle bigger jumps than your appetizers.
Which dishes to adjust first
After managing kitchen operations for nearly a decade, I've learned to prioritize based on customer attachment and sales volume:
- Top sellers: Your crowd-pleasers can absorb 15-25% increases
- Specialties: Dishes people drive across town for handle more
- Side dishes: Fries, salads, bread – customers barely notice these bumps
- Beverages: Usually already profitable, tread carefully here
💡 Example of phased approach:
Pasta carbonara from €18.50 to €27.25:
- March: €18.50 → €21.50 (+16%)
- June: adjust recipe (-€1.00 costs)
- September: €21.50 → €24.50 (+14%)
Result: 44% to 32% food cost in 6 months
Adjust recipes to reduce costs
Price increases aren't your only weapon. Smart recipe tweaks can save serious money:
- Portion sizes: Drop that steak from 250g to 200g, save €2-3 per plate
- Ingredient swaps: Grana Padano performs like Parmesan for half the cost
- Smart garnishes: Less microgreens, more strategic vegetable choices
- House-made efficiency: Your marinara beats store-bought on cost and taste
Communication with customers
Be straightforward but don't overshare about your pricing mistakes:
- Highlight quality improvements and fresh sourcing
- Reference rising supplier costs (everyone gets inflation)
- Launch new menu items alongside price changes
- Maintain affordable lunch deals and happy hour pricing
⚠️ Note:
You'll lose customers. That's inevitable. But 20% fewer guests with healthy margins beats a packed house that's bleeding money.
The alternative: do nothing
Ignore this problem and watch your business slowly die. At 45% food cost versus 30%, you're hemorrhaging 15 cents on every revenue dollar. That's €75,000 annually on €500,000 in sales.
Money you need for equipment repairs, staff retention, and actually paying yourself.
How do you tackle price correction step by step?
Calculate your actual food cost per dish
Add up all ingredient costs and divide by selling price excl. VAT. Focus on your 10 best-selling dishes first.
Determine your target price per dish
Calculate the minimum you need to charge for 30-35% food cost. This is your target price over 6-12 months.
Create a phased plan
Spread the price increase over 2-3 moments. Start with a 15-20% increase on your most popular dishes.
Adjust recipes between increases
Optimize portion sizes and replace expensive ingredients where possible. This lowers your costs without raising prices.
Monitor your revenue and customer reaction
Track how many customers you lose and whether your total profit increases. Adjust the pace if needed.
✨ Pro tip
Target your 3 bestselling entrees first with 18-22% increases over the next 90 days. These dishes have built-in customer loyalty and generate the fastest margin recovery.
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 many customers will I lose with a 20% price increase?
Expect to lose 10-15% of your customer base with a 20% price bump. But if you're moving from unprofitable to profitable margins, your bottom line improves despite fewer covers.
Can I raise all prices at once?
That's a dangerous gamble that usually backfires. Customers feel ambushed by sudden across-the-board increases. Gradual adjustments over 6-12 months feel more natural, starting with your most loyal dish followers.
What if my competitor doesn't raise prices?
Focus on your unique value – superior ingredients, better service, memorable atmosphere. If competitors are also operating at a loss, they won't survive long-term either.
Should I explain why I'm raising prices?
Keep explanations brief and forward-looking: rising ingredient costs and commitment to quality. Never mention your past pricing errors or financial struggles.
How do I know if my new prices are right?
Track food cost percentages weekly and aim for 28-35% depending on your restaurant type. Your overall profitability should climb even with some customer loss.
Can I lower costs instead of raising prices?
Cost reduction helps but rarely solves the whole problem. Smaller portions, strategic ingredient substitutions, and better purchasing can shave 2-5% off food costs. Most situations need both approaches.
What's the biggest mistake restaurants make during price corrections?
Raising prices on low-margin, high-frequency items first. Customers notice when their regular coffee or side salad jumps 25%. Start with premium dishes where the value perception is already established.
📚 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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