Running losses on your dishes from opening day is the fastest path to bankruptcy. Many new restaurant owners underestimate their cost prices or forget important costs, causing every sold portion to cost money instead of making profit. In this article you'll learn step-by-step how to set profitable prices from day one.
The three biggest pitfalls at opening
New restaurants often make the same mistakes when determining their menu prices. These mistakes cause you to lose money on every dish you serve from day one.
⚠️ Heads up:
Many starters think they can adjust their prices later. But once you're open with prices that are too low, it's difficult to get guests used to higher prices.
- Pitfall 1: Only counting main ingredients (forgetting: garnish, sauces, butter, oil)
- Pitfall 2: Calculating with purchase price without accounting for cutting loss and waste
- Pitfall 3: Keeping food cost percentage too low out of fear of high prices
Calculate your real cost price per dish
The cost price of a dish is more than just the main ingredients. You need to count literally everything that goes on the plate, including the invisible stuff.
💡 Example: Steak with fries
What restaurants often forget to count:
- Steak 200g: €6.40
- Fries 250g: €0.85
- Butter for cooking: €0.15
- Spices and pepper: €0.05
- Salad garnish: €0.45
- Dressing: €0.20
- Cutting loss meat (15%): €0.96
Real cost price: €9.06 (not €7.25)
The difference of €1.81 per portion seems small, but at 100 portions per week this means €9,412 less profit per year.
Set your minimum selling price
With your real cost price you can calculate what you need to charge at minimum to be profitable. Use the food cost formula for this.
Formula: Minimum selling price (excl. VAT) = Cost price ÷ (Desired food cost % ÷ 100)
💡 Example: Steak calculation
Cost price: €9.06 | Desired food cost: 30%
- Minimum price excl. VAT: €9.06 ÷ 0.30 = €30.20
- Price incl. 9% VAT: €30.20 × 1.09 = €32.92
- Rounded: €32.95
Below €32.95 you're running losses on this dish
Check your competition and market position
Your cost price determines your minimum, but the market determines your maximum. Check what comparable restaurants charge for similar dishes.
- Visit 5-10 comparable restaurants in your area
- Note their prices for similar dishes
- Pay attention to portion sizes and ingredient quality
- Determine where you want to position yourself
⚠️ Heads up:
If your minimum price is far above the market, you need to adjust your concept. Buy cheaper, offer smaller portions, or choose different dishes.
Test your prices before opening
Hold a trial evening or soft opening with your calculated prices. Pay close attention to guest reactions and how much they order.
💡 Example: Signals during trial evening
Positive signals:
- Guests order without hesitation
- Average check value as expected
- No comments about high prices
Negative signals:
- Guests only choose the cheapest options
- Many questions about prices
- Low average check value
Build a buffer for unforeseen costs
In your first months you'll run into unexpected costs. So build a small buffer into your prices instead of calculating on the edge.
- Calculate with 28% food cost instead of 30% for extra margin
- Account for seasonal influences on ingredient prices
- Plan for 10-15% waste in your first months
How do you set profitable prices? (step by step)
Calculate your complete cost price
Add up all ingredients that go on the plate, including garnish, sauces, spices and oil. Don't forget to account for cutting loss (usually 10-20% extra on top of your purchase price).
Determine your desired food cost percentage
For restaurants this is usually between 28-35%. At opening it's best to stick with 28-30% to have some buffer for unexpected costs.
Calculate your minimum selling price
Divide your cost price by your desired food cost percentage. Then multiply by 1.09 for 9% VAT. This is your absolute minimum to avoid running losses.
Check market prices
Compare your calculated price with what comparable restaurants charge. If you're far above the market, adjust your recipe or concept instead of lowering your prices.
Test your prices before opening
Organize a trial evening with your calculated prices. Pay attention to guest reactions and adjust if needed before you officially open.
✨ Pro tip
Create an Excel sheet with all your dishes and their cost prices before you open. Update this every month with new purchase prices from your suppliers, so you prevent running losses without noticing.
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
Should I include VAT in my cost price calculation?
No, always calculate excl. VAT. You calculate your food cost percentage based on the selling price excl. VAT. You add the VAT only when determining your menu price.
What if my calculated price is higher than the competition?
Then you need to adjust your concept, not lower your prices. Choose cheaper ingredients, smaller portions, or different dishes. Selling below your cost price means running losses.
What food cost percentage should I aim for as a starter?
Aim for 28-30% instead of 35%. As a beginner you'll make more mistakes and have more waste. That extra margin gives you a buffer for learning moments.
Should I count cutting loss and waste?
Yes, absolutely. If you buy 1 kg of meat but throw away 200g due to cutting loss, you're actually paying 25% more per usable kilo. Always include this in your cost price.
Can I adjust my prices later?
Raising prices after opening is difficult and can drive guests away. It's better to charge the right price from the start, even if it seems high. Guests accept fair prices when quality is there.
📚 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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