Comparing different actions based on margin and risk helps you make the best choice for your restaurant. Many entrepreneurs choose based on gut feeling, but that can lead to expensive mistakes. In this article you'll learn a systematic way to weigh your options against each other.
Why compare on margin and risk?
Every action you take has consequences for your profit and brings uncertainty with it. A new supplier might be cheaper, but what if the quality disappoints? A seasonal dish might become popular, but what if you buy too much stock?
By comparing systematically you prevent:
- Taking too much risk for little extra margin
- Missing opportunities because you overestimate the risk
- Regretting your choice afterwards
The margin-risk matrix
Plot each action on two axes: potential margin impact and risk. This gives you four quadrants:
- High margin, low risk: Do this right away
- High margin, high risk: Consider carefully
- Low margin, low risk: Only if you have time
- Low margin, high risk: Don't do it
💡 Example:
You're considering three actions for the fall season:
- New pumpkin soup: +€2,000 margin, low risk
- Add game dishes: +€8,000 margin, high risk
- Cheaper potato supplier: +€500 margin, low risk
Ranking: Pumpkin soup first, then consider game, potatoes last.
Calculate margin impact
For each action you calculate the potential impact on your monthly margin. Think about:
- Cost savings: How much do you save per month?
- Extra revenue: How much additional sales do you expect?
- Food cost improvement: Does your food cost percentage drop?
- Investment costs: What do you need to spend to get started?
💡 Example calculation:
New beef supplier:
- Savings: €3 per kg
- Usage: 80 kg per month
- Monthly savings: €240
- Annual impact: €2,880
Estimate risk
Risk consists of two parts: the chance that something goes wrong and the consequences if it does. Ask yourself:
- What can go wrong?
- How likely is it?
- What will it cost if it does?
- Can you limit the risk?
⚠️ Note:
Always work with scenarios. What happens in the best case, worst case, and most likely case?
Practical comparison method
Use a simple score of 1-10 for both margin impact and risk. Then calculate the ratio:
Score = Margin impact / Risk
The higher the score, the more attractive the action. Focus on the actions with the highest score.
💡 Example scoring:
Three options compared:
- Option A: Margin 8, Risk 3, Score 2.7
- Option B: Margin 6, Risk 2, Score 3.0
- Option C: Margin 9, Risk 8, Score 1.1
Best choice: Option B (highest score)
Timing and order
You don't have to do everything at once. Plan your actions based on:
- Season: When is it most relevant?
- Capacity: How much can you handle at once?
- Dependencies: Does one action build on another?
- Payback period: How quickly do you see results?
Start with actions that deliver quick results and take little time. Use those gains to tackle bigger projects.
How do you compare actions systematically? (step by step)
List all options
Write down all possible actions you're considering. Think about switching suppliers, new dishes, different purchasing, staffing changes. Limit yourself to a maximum of 5 options at a time.
Calculate the margin impact
For each option you calculate the expected financial impact per month. Add up all costs and benefits. Don't forget to include investments and startup costs.
Estimate the risk
Give each risk a score of 1-10. Think about quality risk, delivery risk, guest acceptance and financial risks. Be honest about what can go wrong.
Calculate the score and rank
Divide margin impact by risk for each option. Rank from high to low. Start with the highest score and work your way down. Don't plan more than 2-3 actions at once.
✨ Pro tip
Keep a log of your choices and the actual outcomes. After a year you'll see patterns in your estimates and you'll get much better at predicting margin and risk.
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 do I know if my risk estimate is correct?
Start with small tests where possible. Try a new supplier first for just one product, or test a seasonal dish for a week. That way you learn the real risks.
What if two options have the same score?
Then choose the option with the lowest absolute risk. With equal scores, it's better to be sure of a smaller profit than uncertain of a larger one.
Do I always have to choose the highest score?
Not always. Also look at timing, your own capacity and seasons. Sometimes it's smarter to wait for a better moment for the highest score.
How often should I update my comparison?
Check monthly whether your assumptions still hold. Market prices change, seasons shift and your own situation changes. Adjust your scores where needed.
What if I don't have concrete figures for margin impact?
Then estimate conservatively. It's better to be pleasantly surprised than disappointed. Use industry benchmarks or ask fellow restaurant owners about their experience.
📚 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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