Practical Tools
Restaurant

Discount and Promo Profit Tool

Enter your normal selling price and food cost for an item, then set the promotional price or discount percentage, and estimate the volume increase the promotion will generate. The calculator shows total profit at normal price, total profit with the promotion, and the additional volume needed for the promo to break even.

Enter your prices, food cost, volume, and expected lift to analyse your promo profit.
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Results are estimates based on the assumptions you enter. Promotional volume lift is inherently uncertain. This tool is a planning aid, not a guarantee of promotional outcome.

How to use this tool

  1. 1Enter the normal selling price of the item or the average order value you are discounting.
  2. 2Enter the food cost (COGS) for the item or average order.
  3. 3Enter the promotional price or the discount percentage you plan to offer.
  4. 4Enter your current normal weekly or monthly volume for this item.
  5. 5Enter your estimate of how much volume the promotion will add as a percentage increase - for example, 30 for a 30% volume lift.

Formula used

Normal gross profit per unit = price - food cost. Promo gross profit per unit = promo price - food cost. Break-even volume multiplier = normal gross profit per unit / promo gross profit per unit. Total promo profit = promo gross profit per unit x promoted volume.

Example

Pizza: price 18, food cost 5.50, promo price 14 (22% off), volume lift 40%

Normal gross profit: 12.50 per pizza. Promo gross profit: 8.50. If you normally sell 200 pizzas, normal total profit is 2,500. With 40% more volume (280 pizzas), promo total profit is 2,380 - you are 120 worse off despite more revenue. You need at least a 47% volume lift to break even on profit.

Set lunch: price 12, food cost 3.80, promo price 9 (25% off), volume lift 70%

Normal gross profit: 8.20. Promo gross profit: 5.20. At 100 normal covers, profit is 820. At 170 promo covers, profit is 884. A 70% volume lift generates 64 more gross profit. The promo works, but only if the volume assumption is accurate and labor cost does not spike from the busier service.

Common use cases

  • Evaluating whether a platform-suggested discount (like Uber Eats' 20% off promotion) is worth participating in
  • Calculating the volume lift needed for a buy-one-get-one-free offer to break even on profit
  • Testing whether a lunchtime deal will generate more total profit than normal lunch pricing
  • Deciding between a percentage discount and a fixed-price special for a slow trading period
  • Presenting a promo proposal to business partners with clear profit numbers rather than just revenue projections

Common mistakes

  • Measuring promotion success by revenue rather than gross profit - more revenue at a lower margin often means less actual profit.
  • Overestimating volume lift - promotions rarely generate as much incremental volume as hoped, especially for established restaurants.
  • Not accounting for the labor cost of a busier service - a promotion that fills the restaurant during a normally quiet period adds staffing cost that reduces the profit gain.
  • Running deep discounts on high food cost items - a 20% discount on an item already at 40% food cost leaves very little gross profit per unit.

Frequently asked questions

What volume increase do I need for a 20% discount to break even?

It depends on your food cost. With a food cost of 30%, your normal gross profit margin is 70%. After a 20% discount, the gross margin drops to 62.5% (new price is 80% of normal, food cost unchanged). To break even, you need volume to increase by 70/62.5 - 1 = approximately 12%. But with a 40% food cost, you need a 25% volume increase just to break even on gross profit.

Should I participate in delivery platform discount programs?

Calculate it case by case using this tool. Platform promotions often feature 20-30% discounts. After the platform's commission, the gross profit per order can be very thin or negative. Unless the volume lift is substantial and you have the capacity to handle it, many operators find these programs unprofitable. Opt out if the break-even volume lift is unrealistic.

Is a buy-one-get-one deal worth it?

BOGO effectively halves your revenue per pair of items. If your food cost is 35%, your gross profit on two items at full price is 65% x 2 = 130% equivalent. On BOGO, you get full price revenue for one item but provide two, so gross profit is 65% - 35% = 30% on the pair. You need 130/30 = 4.3x the normal volume just to break even on gross profit. BOGO almost never makes sense on food items with high food cost.

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