A discount promotion can increase your revenue, but at the same time lower your margin. Many restaurant owners forget to calculate this second part and are disappointed with the results afterwards. In this article, you'll learn exactly how to calculate in advance what a discount promotion costs you and what it brings in.
Why discount promotions often disappoint
You think: 20% discount = more guests = more revenue. But often you see more guests, but less profit. That's because you shouldn't just look at revenue, but also at your margin per guest.
⚠️ Note:
A discount promotion always lowers your margin per plate. The question is whether you compensate for that with more volume.
The formulas you need
For a proper calculation you need three formulas:
- New selling price = Normal price × (100% - discount percentage)
- New margin per plate = New selling price - Ingredient costs
- Break-even volume = Normal revenue / New selling price
With these three you can calculate exactly what an action costs you and when it becomes profitable.
Step 1: Calculate your new margin per plate
Start with your best-selling dish. Calculate what you keep from it after the discount.
💡 Example:
Pasta carbonara, normally €18.50 incl. VAT:
- Normal price excl. VAT: €16.97
- Ingredient costs: €5.10
- Normal margin: €11.87 per plate
With 20% discount:
- New price excl. VAT: €13.58
- New margin: €8.48 per plate
- Loss per plate: €3.39
Step 2: Calculate the break-even point
How many extra guests do you need to earn the same as normal?
Break-even formula: (Normal margin / New margin) × Normal number of guests
💡 Example:
Normally 80 guests per day:
- Break-even: (€11.87 / €8.48) × 80 = 112 guests
- You need 32 extra guests (40% more!)
- Otherwise you earn less than normal
Step 3: Calculate the impact on your daily revenue
Now you can calculate different scenarios. What happens with 10%, 20% or 30% more guests?
💡 Scenario calculation:
With 20% more guests (96 instead of 80):
- Revenue: 96 × €14.81 = €1,422 (vs €1,480 normal)
- Profit: 96 × €8.48 = €814 (vs €950 normal)
- Result: €136 less profit despite more revenue
When discount promotions actually work
Discount promotions can make sense in specific situations:
- Quiet periods: Fixed costs keep running, every extra guest helps
- Attracting new guests: If they come back later at normal price
- Clearing inventory: Better to earn something than throw it away
- Competitive battles: Keeping market share can be more important
⚠️ Note:
Discount promotions can become addictive. Guests get used to them and only come with a discount.
Alternative promotions that deliver more
Instead of discounting the main price you can also:
- Free side dish: Only costs you the ingredients (€2-3)
- Second person half price: Increases your average bill
- Happy hour time slot: Fills quiet moments without touching normal prices
- Loyalty card: Encourages repeat visits without direct discounts
KitchenNmbrs and discount promotions
With KitchenNmbrs you can quickly calculate different discount scenarios. You immediately see what each percentage discount does to your margin and how many extra guests you need to break even.
The app automatically calculates your new food cost percentage and shows the difference with your normal margin. This way you can estimate in advance whether a promotion is worth it.
How do you calculate the impact of a discount promotion?
Calculate your current margin per dish
Take your best-selling dish and calculate: selling price excl. VAT minus ingredient costs. This is your normal margin per plate that you use as your baseline.
Calculate the new margin after discount
Lower your selling price by the discount percentage and subtract the ingredient costs again. The difference from step 1 is what you lose per plate.
Determine how many extra guests you need
Divide your normal margin by your new margin and multiply by your normal number of guests. This is your break-even point where you earn the same as normal.
Calculate different scenarios
Calculate what happens with 10%, 20% and 30% more guests. Compare the total profit with your normal day to see which scenario works best.
✨ Pro tip
Test a small discount promotion first for 2-3 days and measure exactly how many extra guests you get. Use that data to better estimate larger promotions.
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 much discount can I give at maximum?
That depends on your margin. With 30% food cost you can theoretically give up to 70% discount without making a loss, but then you earn nothing on labor and overhead. Stay under 25% discount.
Should I calculate the discount on the price including or excluding VAT?
For your own calculations always excluding VAT. On the menu you usually show the discount including VAT because that's clearer for guests.
What if I give different discounts per dish?
Calculate the impact per dish and add up the results. Watch out that guests often choose the dish with the highest discount, which can affect your mix.
How long should a discount promotion last?
Short promotions (1-3 days) often work better than long ones. With long promotions guests get used to the low price and it becomes difficult to go back to normal.
Is it better to give discounts on drinks than on food?
Drinks often have a lower cost price (18-25% vs 30-35% for food), so you can more easily discount them without destroying your margin.
📚 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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