A 20% price increase on your main ingredient directly impacts your profitability. Many restaurant owners react too late or make the wrong decisions. In this article, you'll learn step-by-step how to calculate the impact and what options you have.
First, calculate the impact on your food cost
Before you make decisions, you need to know what this price increase actually costs you. A 20% increase on one ingredient doesn't automatically mean 20% higher food cost for the entire dish.
💡 Example:
Your pasta carbonara has these ingredients:
- Pasta: €0.80
- Bacon: €2.40 (rises to €2.88)
- Cream: €0.60
- Cheese: €1.20
- Other: €0.50
Old cost price: €5.50
New cost price: €5.98 (+8.7%)
The bacon rises 20%, but your total food cost only rises 8.7%. That makes a big difference in your decision.
You have 4 options
Each option has pros and cons. The best choice depends on your situation.
Option 1: Raise menu price
- Pro: You keep the same margin
- Pro: Simple to implement
- Con: Guests notice it immediately
- Con: Possibly fewer sales
Option 2: Reduce portion size
- Pro: Price stays the same
- Pro: Guests notice it less quickly
- Con: Can cause disappointment
- Con: Not always possible (fish, meat)
Option 3: Replace ingredient
- Pro: Cost price can even decrease
- Pro: Opportunity to improve the dish
- Con: Taste changes
- Con: Takes time and testing
Option 4: Accept lower margin
- Pro: No changes for the guest
- Pro: No risk of fewer sales
- Con: Less profit per dish
- Con: Can become problematic long-term
Which option do you choose when?
The best choice depends on the dish and your situation:
💡 Decision guide:
Best-selling dish? Be careful with price increases. Consider adjusting portion or finding an alternative ingredient.
Luxury dish with high margin? Raising the price is usually no problem. Your target audience is less price-sensitive.
Dish with low margin? You must act. Accepting a lower margin is not an option.
Calculate what each option costs or brings in
Make the calculation concrete with your own numbers:
💡 Example calculation:
You sell 80 portions per week of this dish at €18.50.
Option 1 - Price to €19.50:
- Same margin, but possibly 10% fewer sales
- 72 portions × €19.50 = €1,404 revenue (-€76)
Option 4 - Accept lower margin:
- 80 portions × €18.50 = €1,480 revenue
- But €0.48 less profit per portion = €38.40/week less
⚠️ Note:
Always calculate what each option costs you on an annual basis. €38.40 per week = €2,000 per year less profit. That adds up.
Communicate transparently with your team
Explain why you're making these choices. Your team will understand better and help out:
- Explain what the price increase means for your margin
- Ask for input on alternative ingredients
- Train them in explaining changes to guests (when applicable)
- Monitor together whether the new approach works
Prevent surprises in the future
Make sure you can react faster next time:
- Discuss price forecasts with your supplier
- Build a buffer into your food cost (30% instead of 35%)
- Check your cost prices for top dishes monthly
- Always have a backup ingredient in mind
With a system like KitchenNmbrs, you immediately see the impact of price increases on all your dishes, without having to calculate it yourself.
How do you handle a 20% price increase? (step by step)
Calculate the actual impact
Calculate how much your food cost rises for the entire dish. A 20% increase on one ingredient often means 5-10% higher total cost price. Use the formula: new cost price divided by old cost price minus 1.
Compare your 4 options
Calculate for each option what it costs or brings in: raise price, reduce portion, replace ingredient, or accept lower margin. Look at impact on both revenue and profit per week.
Test and implement your choice
Start with your best option and monitor the results. With a new ingredient: test first with a small part of your inventory. With a price increase: watch sales figures in the first few weeks.
✨ Pro tip
Check not just your main ingredients, but also your garnishes and sauces. Often they rise too, but you forget to include them in your calculation.
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
Do I always have to raise my menu price when there's a price increase?
No, it depends on the dish and your target audience. For best-sellers, you're better off adjusting the portion or finding an alternative ingredient. For luxury dishes, a price increase is usually no problem.
How much can I raise my price without losing customers?
As a rule of thumb: increases up to 5% guests barely notice. Above 10% becomes risky. Always test first with part of your menu before raising everything.
Is it better to wait until multiple ingredients become more expensive?
No, waiting costs you money. Every week you wait to adjust, you lose profit. Handle it right away and communicate honestly to your guests why you're making changes.
How do I prevent this from happening to me again?
Build a buffer into your food cost (calculate with 30% instead of 35%), discuss price forecasts with suppliers, and check your cost prices monthly. That way you can react faster.
What if I have multiple suppliers for the same product?
Compare prices immediately and consider buying more from the cheapest one. Watch out for quality differences and delivery reliability though. Sometimes something more expensive but more reliable is still better value.
📚 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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