Every restaurant owner faces the same dilemma: raise prices and risk losing customers, or keep them steady and watch profits disappear. Food costs climb 3-6% annually while your menu prices stay frozen. Two years later, you're wondering why your 30% food cost became 38%.
How inflation destroys your margins
Inflation works like a slow leak in your profit bucket. You can't see it happening day by day, but every month your ingredients cost a little more. Keep your selling prices the same, and your margins shrink automatically.
💡 Example:
Your steak cost in 2022:
- Ingredients: €9.00
- Selling price: €32.00 (€29.36 excl. VAT)
- Food cost: 30.7%
After 2 years of inflation (5% per year):
- Ingredients: €9.92
- Selling price: still €32.00
- Food cost: 33.8%
Result: 3.1 percentage points less margin
The real cost of standing still
Most owners think they can't raise prices because competitors aren't either. But all your expenses keep climbing:
- Meat: 4-8% annually
- Fish: 3-6% annually
- Dairy: 5-10% annually
- Energy: often much higher
- Staff wages: minimum 2-3% annually
Based on real restaurant P&L data, establishments that ignore inflation for two years lose 10-20% of their purchasing power without realizing it. That's the difference between profit and breaking even.
⚠️ Watch out:
Many restaurants fail not because of bad food, but because they waited too long to adjust prices. Your food cost creeps up slowly until you're operating at a loss.
Why smart competitors adjust gradually
Successful restaurants raise prices annually in small increments. €0.50 here, €1.00 there. Customers barely notice these tiny bumps, but margins stay healthy.
You freeze prices for two years, then suddenly need to add €3.00 per dish. That's when customers really notice.
💡 Example:
Restaurant A adjusts annually:
- 2022: €28.00
- 2023: €29.00 (+€1.00)
- 2024: €30.00 (+€1.00)
Restaurant B waits two years:
- 2022: €28.00
- 2023: €28.00 (no change)
- 2024: €31.00 (+€3.00 at once)
Which increase draws more attention?
The ripple effect across your operation
If your food cost jumps from 30% to 36%, you've lost 6 percentage points of margin. With €400,000 in annual revenue, that's €24,000 less profit. Enough to cover:
- An additional chef's salary
- Complete terrace renovation
- Full year's marketing budget
- Or simply: a decent income for yourself
How to stop the bleeding
The fix is straightforward: raise your prices annually to match inflation. No more, no less. This maintains healthy margins and avoids sticker shock.
Annual adjustment formula:
New price = Current price × (1 + inflation%)
💡 Example:
Current price: €28.00
Inflation: 4%
Calculation: €28.00 × 1.04 = €29.12
Rounded: €29.00 (cleaner menu appearance)
Tools like a food cost calculator help you see exactly how inflation affects each dish's profitability, so you can adjust before margins disappear.
How do you adjust your prices for inflation? (step by step)
Check your current food cost per dish
Calculate what the ingredients currently cost for your 10 best-selling dishes. Divide this by your selling price excl. VAT and multiply by 100 to get the percentage.
Determine the inflation percentage
Look at the average price increase from your suppliers over the past year. This is usually between 3-6%. Also check the general inflation rate in the Netherlands (CBS figures).
Calculate your new prices
Multiply each current price by (1 + inflation%). Round to nice amounts (€28.73 becomes €29.00). Check that your food cost then comes back under 35%.
✨ Pro tip
Review your supplier invoices from 12 months ago versus today to calculate your actual ingredient inflation rate. Most restaurants underestimate this by 2-3 percentage points.
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 often should I adjust my prices for inflation?
Every year in January or September works well. Small, regular adjustments are less noticeable than big jumps every two years.
What if my competitors aren't raising their prices?
Then they're slowly losing money without realizing it. You can maintain quality because you have healthy margins. Eventually, you'll outlast them.
How much inflation should I pass through to customers?
At least match the increase in your food costs. Ask your suppliers how much their prices rose over the past 12 months and use that as your baseline.
Won't we lose customers with price increases?
Small increases of 3-5% go largely unnoticed by customers. Poor quality due to squeezed margins? That they'll definitely notice.
Should I raise prices on all dishes simultaneously?
Yes, but not by identical amounts. Dishes with higher food costs need bigger increases than those with lower food costs.
What's the best way to calculate inflation impact on individual menu items?
Track your ingredient costs monthly and calculate the percentage increase for each dish's components. Then adjust menu prices to maintain your target food cost percentage.
📚 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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