Why isn’t gross profit per portion enough?
The calculator’s gross profit is the sale before VAT minus the portion cost you enter. If your entered cost covers ingredients and packaging but leaves out other costs that rise with sales, deduct those separately before calculating overhead coverage.
Contribution means the amount each sale leaves towards fixed costs after all variable costs. Fixed costs are treated as unchanged within the trading period and capacity being tested. Your actual staffing, energy and service arrangements determine which costs belong where.
Northern Ireland’s official business guidance explains the distinction between fixed costs, variable costs and contribution: https://www.nibusinessinfo.co.uk/content/covering-fixed-and-variable-costs . The figures below are original illustrative inputs, not industry benchmarks.
What inputs does this example assume?
Assume one menu item sells for £13.20 per portion, including an explicitly assumed 20% sales VAT. Its entered portion cost is £4.10, covering ingredients and packaging. A separate £0.40 per sold portion covers all other variable costs in this simplified model.
The day’s remaining fixed costs total £305. This is an assumed allocation of costs such as scheduled staffing and premises expenses to one trading day. None of those costs is also included in the £4.10 or £0.40 figures.
Assume this item alone must cover the £305, with unchanged unit costs and sufficient production capacity. Any unsold-portion allowance is already reflected in the £4.10, so no further waste adjustment is applied. Costs exclude recoverable VAT and include non-recoverable VAT.
All worked numbers were checked using Python 3. Calculations retain full precision; money is displayed to pennies and percentages to two decimal places.
How much does each portion leave?
Net sale = gross customer price ÷ (1 + VAT percentage ÷ 100). Gross profit = net sale − entered portion cost. GP margin = gross profit ÷ net sale × 100.
Here, £13.20 ÷ 1.20 = £11.00 net sale. Subtracting the £4.10 entered cost gives £6.90 gross profit per portion and a 62.73% GP margin.
Now deduct the separate variable-cost allowance: £6.90 − £0.40 = £6.50 contribution per sold portion. Use £6.50 for the overhead calculation because the additional 40p must be paid whenever another portion sells.
If your calculator cost already includes that 40p, do not subtract it again. Gross profit is not net or take-home profit.
How many whole portions cover £305?
Required portions = fixed costs for the period ÷ contribution per portion.
£305 ÷ £6.50 = 46.923076… portions. Round upwards to 47 whole portions.
At 46 sales, contribution is £299.00, leaving £6.00 of the assumed fixed costs uncovered. At 47 sales, contribution is £305.50, leaving £0.50 after those costs.
At 50 sales, gross profit against the entered portion cost is £345.00. Deduct £20.00 of other variable costs and £305.00 of fixed costs to leave £20.00 within this model.
That £20.00 is only the balance after the costs listed here. It does not establish take-home earnings or a complete accounting profit. A zero or negative contribution cannot cover positive fixed costs through additional identical sales.
Would a different menu price change the sales requirement?
Test a £13.80 customer price while holding the assumed VAT rate and both unit-cost figures unchanged.
The net sale becomes £13.80 ÷ 1.20 = £11.50. Gross profit is £11.50 − £4.10 = £7.40, giving a 64.35% GP margin. After the separate £0.40 variable cost, contribution is £7.00.
£305 ÷ £7.00 = 43.571428… portions, requiring 44 whole sales to cover the listed fixed costs.
This comparison shows the sales requirement at each price. It does not predict customer demand or recommend either price or margin. If the price changes a percentage-based fee, recalculate that fee rather than keeping its pound allowance unchanged.
How can you reproduce this with your own figures?
Open GP Calculator UK at / and choose Check my GP. Enter cost 4.10, customer menu price 13.20 and assumed VAT 20. Record £6.90 gross profit, then deduct the separate £0.40 variable cost outside the calculator. Divide the £305 daily fixed-cost allocation by the resulting £6.50 and round upwards.
Use /#guide for input explanations and /methodology/ for calculation assumptions and rounding. The calculator supplies the portion arithmetic; the daily overhead division is a separate step.
Before using the result, list each expense once and use the same period for costs and sales. Check whether reaching the required quantity needs extra staffing or equipment: a capacity change can alter fixed costs. For a mixed menu, use a documented expected contribution per sold item based on the planned mix rather than treating every sale as identical.
Which VAT assumptions must you replace?
The assumed 20% rate demonstrates arithmetic and does not classify the item. Use the treatment applicable to the actual sale; HMRC’s catering and takeaway guidance explains the distinctions: https://www.gov.uk/guidance/catering-takeaway-food-and-vat-notice-7091 .
Keep purchase costs consistent by excluding recoverable VAT and including VAT you cannot recover. Recovery has conditions and exceptions, explained here: https://www.gov.uk/charge-reclaim-record-vat/reclaim-vat-business-expenses .
Neither this guide nor the calculator automatically classifies food for VAT. This is a costing example, not personalised tax advice.
Sources
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Use the free GP calculator to check selling prices, compare margins and save menu items on your device. Gross profit is before remaining business expenses.
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