Every round you give away and every discount you allow doesn't disappear from your revenue — it was never in it. Your pour cost and your food cost add up to the last cent; the third cost line in your business is the only one that appears nowhere in your books: what you could have charged, and didn't.
A bottle of wine that gets opened and never emptied shows up in your stock count. A portion that's plated too generously shows up in your food cost. But a round 'on the house', a discount for a regular, or a staff member eating for free leaves your business without ever leaving a number behind. There's no stock variance, no credit note, often not even a line on the receipt — it's simply revenue that never existed.
That makes it the hardest of the three cost lines to manage, because you can count the other two by weighing or tallying. This line you have to want to see before you can count it — and most businesses only notice it when someone lays this year's revenue next to last year's and wonders where the difference went.
This guide walks through seven places where that happens: from the calculation mistake almost everyone makes, to the habit nobody ever agreed to. Further down, you plug your own numbers into the calculator — your weekly revenue and what you give away across four categories. You get your percentage against a healthy range, what it costs you per year, and which category weighs heaviest.
Everything calculates in your own browser: nothing is sent anywhere and nothing is stored. The range in this article is a guideline for independently run European businesses — your concept, your regulars and your own policy have the final say.
Why nobody knows this number
A round on the house works, and that's exactly the problem. The norm of reciprocity — one of the most studied principles in social psychology — says people feel obliged to return a favour. A free coffee after a complaint, a glass of cava for an anniversary: it builds goodwill. But repeat it with the same guest three times, and the favour becomes an expectation. Nobody dares say no after that, and the round that was once a gesture has become a fixed cost that appears on no price list.
What's more, nobody decides on the total. A waiter who comps a dessert because service was slow decides on €6. The server who throws in a free beer for a regular decides on €4. Neither of them decides on the €5,000 that adds up to over a year, so nobody feels responsible for it — even though each individual decision is perfectly reasonable on its own.
And the number you should be tracking often appears nowhere at all. A discount rung up through a discount button on the till ends up on a report. A round that a staff member simply takes off the bill before it's printed ends up nowhere — not on the till, not in the books, nowhere. Ask ten owners how much they give away in free rounds, and most can only answer for the part that happened to leave a trace.
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They're listed in the order you usually run into them: from a calculation mistake you can fix tonight, to a habit that takes a quarter to break.
1. You have no number — and therefore no control
Most owners who've ever tried to put a number on this make two mistakes at once. The first is that they track nothing: a round on the house gets decided on the spot and vanishes from memory the moment the guest walks out. The second, for those who do keep count, is that they measure it against the wrong number.
The correct formula is: the amount you give away, divided by what would have come in without those gestures — so your revenue plus what you gave away, not your revenue alone. On a week that brings in €4,200 at the table, of which you gave away €116 in rounds and discounts, that's 116 divided by 4,316, or 2.7%. Measure that same €116 against the €4,200 that actually came in, and you get a number you can't compare with anyone — every bank, every till system and every trade body that publishes a benchmark measures it against revenue before the discount.
Without that correct number, you can't test yourself against the rule of thumb most till suppliers use: between 1 and 1.5% of your revenue before discount is a normal cost of hospitality; above 3%, something is structurally off. Everything you read from here counts up against those two thresholds.
One round worth €6.30 costs you more than €6.30 — it costs you what you have to sell on top to make up for it. The higher your margin, the less that is.
This isn't a reason to never give anything away again — it's a reason to know what the gesture really costs before you give it. At an 8% margin, you need €79 in extra revenue to cover a €6.30 round; that's almost four main courses for one free beer.
2. The round that was never rung up
Most businesses that do have a discount button on the till don't use it for the bulk of what they give away. A discount rung up through that button ends up on a report: you see it, you can count it, you can discuss it. A round that's simply taken off the bill before it's printed — or a table that 'accidentally' never gets rung up — ends up nowhere. No report, no stock variance, no trace.
That's not automatically fraud. It's usually a staff member trying to be hospitable who doesn't know — or was never asked — to do it the right way. But the result is the same: you have no visibility at all over the biggest part of your own leak.
The fix costs no new software. One rule: every free or discounted drink or dish goes through the till, using the discount or comp button, even when the amount comes out to zero. That way the round at least exists on paper, and you can add it up instead of guessing.
3. The recovery gesture with no ceiling
A guest who waits twenty minutes for their main course gets a dessert on the house. Entirely fair — service recovery works. Research on complaint handling consistently shows that a guest whose complaint is resolved well and quickly becomes more loyal than a guest who never had anything to complain about. But that's only true if the gesture is proportionate and gets added up somewhere.
The problem isn't the gesture itself, it's the absence of a ceiling. Without an agreed amount per complaint and per staff member, a €6 dessert on one night grows into a €35 bottle of wine on another, because the next staff member wants to top the last gesture just to feel equally hospitable. Decide once who can approve up to what amount on their own, and that anything above that goes to the manager — not to ban it, but to be able to add it up.
Anyone who wants to make this structural should also read our guide on handling complaints: the seven steps there mean you land in the position where a gesture is the only answer far less often.
4. The regular and the round on the house
This is the leak that grows the slowest and is hardest to stop, because it never feels like a cost — it feels like an investment in a relationship. And the first time, it is. The problem is the norm of reciprocity we already mentioned above: give a regular a round on the house three times, and the fourth time it's no longer a surprise but an expectation. Say no then, and you lose more goodwill than the round ever bought you.
There's no way to avoid this entirely — regulars are the backbone of every independent restaurant, and a gesture is sometimes part of that. But work out what it really costs before it becomes a habit, not after.
One pint at €6.30, given away three times a night, open six nights a week. The same round, worked out four times over.
Nobody ever decides on €5,897 a year — everyone only decides on tonight's round. That's exactly why this leak stays unnoticed for so long: every single decision is too small to think twice about.
5. The staff discount with no limit
A staff member eating for free on their break isn't a leak — it's the norm almost everywhere, and rightly so: it keeps people fresh for the evening service and it's cheaper than catering. The leak starts where that meal quietly turns into a 50% discount for the partner who happens to tag along, or where 'staff eat free' turns into 'staff and whoever staff bring along eat free'.
Decide in advance what counts as a staff meal (during the shift, for the staff member themself, off a fixed menu) and what counts as a staff discount (after the shift, at a fixed percentage, for a limited number of guests per visit). Without that distinction, staff will write and rewrite the rule themselves — usually in the generous direction.
Our guide on the staff meal goes deeper into how to set that up without it becoming a discussion on every shift.
6. The promotion that was never switched off
A happy hour from five years ago, a discount code that was once handed out for your opening, an app that still gives 20% off to anyone who clicks 'new customer' — promo codes are the only leak you switched on yourself, and yet it's the category that keeps running longest without anyone noticing. A temporary promotion doesn't need an end date to start; it very much needs one to stop.
Put every promotion on the calendar with a fixed end date, including the 'permanent' ones. Review your active discount codes at least once a quarter — most till systems show you how often each code was used in the past month, and a code that everyone internally knows but no guest does is costing you without giving anything back.
7. You count it once a year — and that's not control
Without counting, everything above is just theory. But a once-a-year glance at the books tells you nothing useful: by the time you spot the difference, nobody remembers which month, which staff member or which habit caused it.
Once a month is enough, provided you add up the four categories separately instead of lumping them into one big pot. Recovery gestures, regulars, staff and promotions each have their own cause and their own fix — a total that's rising tells you nothing about which of the four is doing it.
What you're looking for is a trend, not a perfect number. Two months running at 2.5% is normal. Four months running climbing from 2 to 5% is a habit that's crept in, and then you know exactly which of the four categories to look at.
Calculate your own leak
Fill in what you bring in at the table on an average week, and what you give away across each of the four categories. The figures are pre-filled with a business that turns over €4,200 a week and gives away €116 in total in rounds and discounts, so you can immediately see how it reads — overwrite them with your own.
You'll get your percentage against the healthy range above, what it costs you per year, and which of the four categories weighs heaviest — that's where you should look first.
Comp Leak Scan
Your revenue, four categories, and the difference in euros per year.
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The range is a guideline for independently run European businesses and applies to your revenue plus what you give away — never to your revenue alone. It doesn't account for your concept or your regulars. Everything calculates in your browser; nothing is sent or stored.
Two things to remember when reading this. The percentage above is always measured against your revenue plus what you gave away — never against your revenue alone, because then you're measuring against a number that has already partly absorbed the leak. And the amount above the 1.5% threshold isn't the entire leak: some of it is simply the cost of hospitality.
The four categories are each fixed in a different place. You fix recovery gestures and promotions with a ceiling or an end date. You fix regulars and staff with an agreement made in advance, not enforced after the fact. So count them separately, and don't just look at the total.
What to do about it this week, this month and this quarter
Nobody manages to tackle all four categories at once. This order works, because each step makes the next one measurable.
This week — start counting
- Ring every free or discounted drink or dish through the till with the discount or comp button, even when the amount comes out to zero.
- Agree with your team on the amount up to which they can give a recovery gesture on their own, and that anything above that comes to you.
- Review your active discount codes and put an end date on every 'permanent' promotion.
This month — measure instead of estimating
- After one month, add up the four categories separately and enter your real figures into the scan above.
- Compare your percentage with the 1 to 3% range: within it, at the edge, or above it.
- Find the category that weighs heaviest and track down the cause on the floor — a habit, a staff member, or a promotion that's still running.
This quarter — lock it in
- Lay the three monthly counts side by side and look at the trend, not at one number.
- Set staff discounts and staff meals down separately, so nobody has to invent the rule themselves.
- Build the scan into your quarterly rhythm, alongside your prime cost — what you give away and what you earn belong in the same conversation.
Hospitality costs something — as long as you know how much
Almost every business that puts a number on this for the first time finds the same pattern: there's no fraud, no ill-intentioned staff member, just a hundred small, reasonable decisions that nobody added up. That's good news, because closing the leak doesn't cost a price increase or a less hospitable business — it only costs keeping track of it, just once.
One rule for the till, one ceiling for recovery gestures, and one count per month per category — that's the whole recipe, and it's usually worth a few thousand euros a year in an average-sized business.
Then do the same with your other two cost lines. Your pour cost works exactly the same way — there too, product disappears without ever being sold — and together with your food cost they make up your prime cost: the one number that really decides whether anything is left at the end of the year.