I'll admit something embarrassing: I used to copy competitor prices religiously. You see the pizzeria down the street charging €16 for a margherita, so you do too. Their supplier costs might be 40% lower than yours, their portions smaller, or their rent half what you pay.
Why copying prices destroys profits
Seems smart: check competitor prices and match them. But every kitchen operates differently. What keeps them profitable can drain your account dry.
💡 Example:
Two bistros next to each other both sell an entrecote for €28:
- Bistro A: buys from wholesaler for €12/kg
- Bistro B: buys from local butcher for €18/kg
- Both serve 200g portions
Bistro A: €2.40 meat per portion (food cost 10%)
Bistro B: €3.60 meat per portion (food cost 15%)
Bistro B bleeds €1.20 per portion by copying blindly. Sell 50 entrecotes weekly? That's €3,120 yearly profit vanishing.
Hidden cost gaps you can't see
Your competitor's menu shows prices, not the reality behind them:
- Supplier pricing: Wholesaler vs. local supplier creates 30-50% cost gaps
- Portion weight: Their 180g vs. your 220g means 22% higher costs
- Ingredient grade: Frozen vs. fresh, generic vs. premium brands
- Side components: Basic fries vs. elaborate garnishes
- Location costs: Their €2,000 monthly rent vs. your €4,000
⚠️ Watch out:
You see their €20 pasta price, not the €5 cost behind it while yours costs €8. They pocket €15 gross, you get €12.
Real-world copying disasters
From tracking this across dozens of restaurants, the pattern's always the same: owners assume identical menu prices mean identical costs. Wrong.
💡 Example:
Restaurant A and B both sell fish & chips for €18.50:
- A: uses frozen cod (€8/kg)
- B: uses fresh cod (€16/kg)
- Both serve 180g fish
A: €1.44 fish per portion
B: €2.88 fish per portion
Restaurant B hemorrhages €1.44 per portion charging identical prices.
Small differences, massive losses
It's not just main ingredients. Every component matters:
- Processing waste: You buy whole fish, they buy fillets - your real cost per kilo jumps 40%
- Garnish complexity: Their basic salad vs. your elaborate vegetable medley
- Sauce preparation: Ready-made vs. homemade carries different price tags
- Bread service: Their free baguette vs. your artisanal sourdough
These "minor" differences compound fast. You think you're hitting 28% food cost but you're actually bleeding at 40%.
Price setting that actually works
Ignore competitors initially. Start with your kitchen's reality:
- Calculate true ingredient costs - every component counted
- Set target food cost percentage - typically 28-35% for full-service restaurants
- Calculate minimum viable price - ingredient cost divided by target percentage
- Market reality check - does your price fit customer expectations?
💡 Example calculation:
Your carbonara costs €7.20 in ingredients. Target: 30% food cost:
- Minimum price excl. VAT: €7.20 / 0.30 = €24.00
- Price incl. 9% VAT: €24.00 × 1.09 = €26.16
- Menu price: €26.50
Now check competitor pricing. Are you competitive?
When higher prices make sense
Sometimes you'll price above competitors. That's fine if you understand why:
- Superior quality: Fresh vs. frozen fish justifies €3-5 premiums
- Generous portions: 250g vs. 200g protein = 25% cost increase
- Prime location: City center rent vs. suburbs = justified price gaps
- Elevated concept: Fine dining vs. casual = different price territories
Know why you charge more. And ensure customers value the difference.
How do you set your own prices? (step by step)
Calculate your actual cost price per dish
Add up all ingredients: main product, garnish, sauces, oil, butter. Don't forget anything that goes on the plate. Calculate with actual purchase prices, not what you hope to pay.
Determine your desired food cost percentage
For restaurants, 28-35% is standard. With higher rent or labor costs, you can go to 25-30%. Check what's realistic for your situation and cost structure.
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 be profitable.
Compare with the market and adjust
Now you look at competitors. Are you in the ballpark? Too expensive? Then you need to lower your cost price or accept higher food cost. Too cheap? You can charge more.
✨ Pro tip
Track your top 8 dishes weekly for ingredient cost creep. Suppliers raise prices gradually, hoping you won't notice until quarterly reviews.
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 if my calculated price is much higher than competitors?
You have three paths: reduce ingredient costs (different suppliers, smaller portions), accept lower margins, or elevate your concept to justify premium pricing. Don't just copy and hope.
Should I ignore competitor pricing completely?
No, but don't start there. Competitor prices show market tolerance levels. Calculate your minimum viable price first, then check if the market supports it.
How do I know if my suppliers charge more than my competitors' suppliers?
Request quotes from 3-4 suppliers quarterly. Compare not just prices but quality grades and service levels. Consider group purchasing with other local restaurants for better rates.
Can I raise prices if I discover they're too low?
Yes, but gradually. Don't shock customers with sudden €3 increases across the board. Start with your top 3 sellers, raise by €1-2, and monitor customer response over 4-6 weeks.
What if higher costs always make me more expensive?
Reposition your concept around the premium. Focus on superior ingredients, exceptional service, or unique preparations that competitors can't match. Don't compete on price if you can't win.
How often should I recalculate my pricing vs. competitors?
Monthly for your core menu items, quarterly for seasonal dishes. Ingredient costs fluctuate, and competitor pricing shifts regularly. Set calendar reminders to avoid profit erosion.
📚 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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