Restaurant break-even point: calculate it and track it
The break-even point is the revenue at which a restaurant covers all its costs. Below it, every month costs money; above it, every cover earns some. Knowing it means knowing how much you need to sell each day, and acting before the month is over.
Fixed and variable costs
Fixed costs don’t move with sales: rent, insurance, subscriptions, baseline energy, permanent staff wages, loan repayments.
Variable costs rise with every sale: ingredients, packaging, card and platform fees.
The formula
The contribution margin is what’s left of each euro sold once variable costs are paid. If they make up 32% of revenue, the margin rate is 68%.
Break-even point = fixed costs ÷ contribution margin rate.
A worked example
A restaurant has €23,220 of fixed costs a month: €3,200 rent, €1,150 energy, €470 insurance and subscriptions, €18,400 payroll including employer costs. Its variable costs make up 32% of revenue.
Its break-even is 23,220 ÷ 0.68 ≈ €34,150 excluding VAT a month. Open 26 days, it needs about €1,313 excluding VAT a day. With an average spend of €28 excluding VAT, that’s 47 covers a day.
The break-even date
The break-even date turns the threshold into a date. For a financial year: break-even date = annual break-even ÷ annual revenue × 12 months. A restaurant that reaches break-even on the 15th then works for its profit.
The levers
- Lower fixed costs: renegotiate contracts, match the rota to genuinely busy services.
- Improve the margin: work on food cost and waste, cut platform commissions.
- Sell more: raise the average spend, open new channels such as takeaway or catering.
Frequently asked questions
Should my own salary go into fixed costs?
Yes, if you pay yourself. Otherwise the break-even you calculate doesn’t cover your own work.
Are staff costs fixed or variable?
Permanent staff are a fixed cost. Extra staff added at peak times can be treated as a variable cost.
How often should I recalculate it?
Whenever costs, prices or the menu change, and at least once a quarter.
This guide provides general information. It doesn’t replace advice from your accountant or a lawyer.