Your menu decides if you'll make money from opening day. Too many new restaurant owners guess at food costs or copy what competitors charge, then wonder why they're bleeding cash. Calculate your exact cost price for every dish before you open doors.
Why getting cost prices right before opening matters
Once customers know your prices, raising them becomes awkward and risky. Your opening menu needs accurate pricing from day one. Miss by just €2 per dish and you'll lose €73,000 annually with 100 daily covers.
⚠️ Note:
Most restaurant failures aren't about bad food or poor service. They happen because owners price dishes incorrectly. You might serve the town's best pasta, but if each plate loses money, bankruptcy follows.
Step 1: Get real prices from your suppliers
Call your future suppliers and request current price sheets. Don't just focus on proteins and main ingredients. You also need costs for:
- Cooking oils, butter, salt, pepper, herbs
- Garnishes and plate decorations
- Sauces and salad dressings
- Bread baskets and side items
New owners often ignore these "minor" expenses. But they'll add 15-20% to your actual food costs.
💡 Example:
Grilled steak with fries and sauce:
- Ribeye 200g: €6.40
- Fresh potatoes 250g: €0.45
- Frying oil portion: €0.25
- Herb butter 20g: €0.35
- House sauce 30ml: €0.40
- Micro greens garnish: €0.25
Total ingredient cost: €8.10
Step 2: Measure portions like your life depends on it
Weigh and measure every ingredient that goes into each dish. Most new restaurants underestimate portion sizes. Your cooks will naturally serve slightly more generous portions than your recipe cards specify.
Add 10-15% to your planned portion sizes. This covers:
- Trimming waste from steaks and fish
- Peeling loss from vegetables
- Cooks being generous with portions
- Kitchen accidents and spillage
Step 3: Work backward to find your selling price
Apply the food cost formula to determine minimum menu prices. Successful restaurants maintain food costs between 28-33%.
Formula: Minimum price = Ingredient cost ÷ (Target food cost percentage ÷ 100)
💡 Real calculation:
Ingredient cost: €8.10
Target food cost: 30%
Base price (excl. VAT): €8.10 ÷ 0.30 = €27.00
Final menu price (incl. 9% VAT): €27.00 × 1.09 = €29.43
Step 4: Reality-check against local competition
Compare your calculated prices with similar restaurants nearby. If you're pricing 20% higher than everyone else, you've got decisions to make:
- Source cheaper ingredients without sacrificing quality
- Reduce portion sizes strategically
- Position yourself as premium with superior service
- Accept you're charging more and own it
⚠️ Note:
Don't copy competitor pricing blindly. They've got different supplier deals, rent costs, and quality standards. Your numbers are what matter for your survival.
Step 5: Build a tracking system that actually works
Create a detailed spreadsheet with every dish's cost breakdown. Most kitchen managers discover too late that they're flying blind when suppliers suddenly raise prices or change specifications. Update this data regularly since ingredient costs shift constantly.
You can start with Excel, but many new restaurants jump straight to specialized software. It prevents calculation mistakes during your hectic opening period.
💡 Essential spreadsheet columns:
- Dish name and description
- Total ingredient cost
- Current food cost percentage
- Minimum viable price
- Actual menu price
- Profit margin per serving
Costly mistakes that sink new restaurants
Mistake 1: VAT confusion
Always calculate using pre-VAT prices. Your menu displays prices including 9% VAT, but food cost calculations use the base price.
Mistake 2: Wishful thinking on portions
Real-world portions run 10-20% larger than recipe specs. Factor this in from the start.
Mistake 3: Ignoring the small stuff
Seasoning, oils, and garnishes aren't free. They'll represent 15-20% of your total food costs.
How do you calculate cost prices for your first menu?
Gather all ingredient prices from suppliers
Request price lists from your future suppliers. Note not only main ingredients, but also spices, oil, garnish and everything that goes on the plate.
Determine realistic portion sizes per dish
Weigh or measure exactly how much of each ingredient goes into one portion. Calculate 10-15% extra for cutting waste and spillage.
Calculate cost price per portion
Add up all ingredient costs for one portion. Don't forget small costs like oil, spices and garnish.
Determine minimum selling price with food cost formula
Divide your cost price by your desired food cost percentage (usually 28-33%). Multiply by 1.09 for the price incl. VAT.
Compare with competitor prices and adjust
Check if your prices are realistic for your market. If you're too expensive, find cheaper ingredients or adjust your concept.
✨ Pro tip
Calculate precise costs for your 6 signature dishes within your first 10 days of supplier negotiations. These dishes will drive 65% of your opening month revenue.
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
What food cost percentage should I target as a new restaurant?
Aim for 30% as a starting point. This gives you breathing room for unexpected costs and the learning curve that comes with opening. Established restaurants often run 28-33%.
Should I include VAT when calculating food costs?
Never include VAT in your cost calculations. Work with pre-VAT prices for everything, then add VAT to your final menu prices.
How often do I need to update ingredient costs?
Check supplier prices monthly at minimum. Proteins, produce, and dairy can fluctuate significantly based on seasons and market conditions.
What if my calculated prices are way higher than competitors?
You have three main options: negotiate better supplier rates, reduce portion sizes strategically, or position yourself as a premium option with superior ingredients and service. Don't just slash prices blindly.
Can I just match what other restaurants charge?
That's financial suicide. Other restaurants have different supplier contracts, overhead costs, and quality levels. Calculate based on your actual numbers, not theirs.
How do I handle seasonal price swings for ingredients?
Build a 5-10% cushion into your calculations for seasonal items like seafood and vegetables. Track costs quarterly and adjust portions rather than constantly changing menu prices.
Should lunch and dinner portions have different cost calculations?
Absolutely, if portion sizes differ significantly. Many restaurants serve 20-30% smaller lunch portions but only drop prices 10-15%, boosting margins during slower daytime hours.
📚 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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