Promotions boost revenue but can hurt profit margins. Many restaurant owners see higher sales during discounts but overlook the margin impact. Learn how to calculate the real effect of promotional periods on your monthly bottom line.
Why promotional periods can be misleading
You run a week-long 20% discount on your most popular dishes. The cash register rings, your team stays busy, guests seem happy. But at month's end, your profit turns out lower than expected. How's that possible?
⚠️ Note:
Higher revenue doesn't automatically mean better profit. Promotional periods lower your margin per dish, so you need to sell significantly more to earn the same amount.
Measure these 4 figures before and after your promotion
To measure the real impact, compare this period with the same period last year or the weeks before:
- Total revenue: How much did you sell?
- Number of covers: How many guests did you serve?
- Average check value: Revenue divided by number of covers
- Gross profit: Revenue minus all food costs
💡 Example - Week before the promotion:
- Revenue: €8,500
- Covers: 340
- Average check: €25.00
- Food costs: €2,550 (30% food cost)
- Gross profit: €5,950
💡 Example - Week during 20% promotion:
- Revenue: €10,200 (+20%)
- Covers: 480 (+41%)
- Average check: €21.25 (-15%)
- Food costs: €3,570 (35% food cost due to lower prices)
- Gross profit: €6,630 (+11%)
Calculate the real impact on your monthly result
The promotion seems successful: more revenue and more profit. But look at the ratios. Your food cost jumped from 30% to 35% due to lower selling prices. Per euro of revenue, you're earning less.
Formula for profit impact per euro of revenue:
Profit per euro = (100% - Food cost% - Fixed costs%) / 100
💡 Impact calculation:
Suppose your fixed costs are 45% of revenue (staff, rent, energy):
- Normal week: 100% - 30% - 45% = 25% profit per euro
- Promotion week: 100% - 35% - 45% = 20% profit per euro
You earn 5 percentage points less per euro of revenue during the promotion.
Calculate the impact across your entire month
If you run a promotion one week per month, what does that mean for your monthly result? Take your normal monthly revenue and calculate what changes. This is a pattern we see repeatedly in restaurant financials - owners focus on weekly spikes but miss the monthly picture.
- 3 normal weeks: 75% of your monthly revenue at normal margin
- 1 promotion week: 25% of your monthly revenue at lower margin
- Possible additional revenue from more guests
- Possible lower revenue in weeks after the promotion (guests wait for the next discount)
⚠️ Note:
Also measure the weeks after your promotion. Sometimes promotions pull revenue from future weeks forward, leaving you less busy later.
Alternative ways to measure impact
Besides revenue and profit, you can also measure other effects:
- New guests: How many first-time visitors did you get?
- Repeat visits: Do promotion guests come back at regular prices?
- Cross-selling: Did guests also order non-promotion dishes?
- Operational costs: Did the busy period require extra staff?
A food cost tracking system helps you monitor these figures without manual calculations. You see your food cost per period directly and can easily compare different weeks.
How do you measure the impact of a promotional period? (step by step)
Gather figures from the reference period
Note from a comparable week without promotion: total revenue, number of covers, average check value, and total food costs. These figures are your baseline to compare against.
Measure the same figures during the promotional period
Keep track of exactly the same figures during your promotion. Pay special attention to your food cost percentage - this usually rises due to lower selling prices.
Calculate profit per euro of revenue
Subtract your food cost percentage and fixed costs percentage from 100%. Compare this number between normal weeks and promotion weeks to see how much you earn per euro.
Calculate the impact across your monthly result
Multiply the difference in profit per euro by your total monthly revenue. Don't forget to include the weeks after the promotion - sometimes revenue drops there.
✨ Pro tip
Track your profit margin daily during the 2 weeks following any promotional period. Many restaurants see a 15-20% dip in covers immediately after discounts end, as customers wait for the next 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
How do I know if my promotion was actually successful?
A promotion is successful if your total monthly profit is higher than without the promotion. Don't just measure the promotion week, but also the impact on the weeks after. Look at profit per euro, not just total revenue.
Should I include VAT in this calculation?
Always calculate excluding VAT. Your revenue figures from your cash register system are including VAT, so divide by 1.09 to get the actual revenue.
What if I don't have figures from previous periods?
Start tracking from now on. For your next promotion, you'll have comparison material. Otherwise, use industry averages as a rough indication.
How long should I wait to measure the full impact?
Measure at least 4 weeks: the week before, during, and 2 weeks after your promotion. Sometimes it takes a while before guests come back at regular prices.
What's a good profit margin during a promotional period?
Maintain at least 15-20% profit per euro, even during promotions. Otherwise, you're mainly working to cover costs without really earning. Calculate this as (Revenue - Food costs - Fixed costs) / Revenue.
Should I factor in the cost of promoting the discount itself?
Absolutely. Add marketing costs, extra staff hours, and any additional operational expenses to your calculation. These promotional costs can significantly impact your actual ROI and should be deducted from your gross profit.
📚 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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