Should you move your restaurant to save on rent? Many restaurant owners face crushing rent prices and wonder if relocating to a cheaper spot makes sense. The math isn't as simple as comparing rent costs.
Why location determines your profit potential
Your location drives two critical factors: rent expenses and customer volume. Lower rent boosts your margins immediately, but fewer customers can destroy your bottom line. You need to balance both elements carefully.
? Example:
Restaurant in city center vs. suburb:
- City center: €8,000/month rent, 120 covers/day
- Suburb: €4,000/month rent, 80 covers/day
- Average check: €28
City center revenue: 120 × €28 × 26 days = €87,360/month
Suburb revenue: 80 × €28 × 26 days = €58,240/month
The break-even formula for relocating
To figure out if moving pays off, you need the break-even point. This tells you exactly how much revenue you can lose while still coming out ahead.
Formula:
Break-even revenue = (Current rent - New rent) / Gross profit margin %
? Example calculation:
Situation:
- Current rent: €8,000/month
- New rent: €4,000/month
- Gross profit margin: 65% (after food cost and variable costs)
Break-even: (€8,000 - €4,000) / 0.65 = €6,154/month
You can lose a maximum of €6,154 in revenue to break even.
Hidden relocation expenses
Moving creates one-time and ongoing costs that'll eat into your savings. Most kitchen managers discover too late that these expenses can wipe out rent savings for months.
- One-time costs: moving, renovations, new permits, marketing
- Ongoing costs: higher delivery fees, different suppliers, customer acquisition marketing
- Revenue loss: first months typically see reduced revenue due to low brand awareness
⚠️ Note:
Expect a 3-6 month ramp-up period where revenue drops 20-40%. This cashflow hit can be brutal if you're not prepared.
Building revenue scenarios
Create three scenarios: optimistic, realistic, and pessimistic. This shows you the full range of potential outcomes and helps avoid nasty surprises.
? Example scenarios:
Current revenue: €80,000/month
- Optimistic: 90% retention = €72,000/month
- Realistic: 75% retention = €60,000/month
- Pessimistic: 60% retention = €48,000/month
With a €4,000 rent difference you have €6,154 'room'. All scenarios stay above this threshold, so moving looks smart.
Explore alternatives before relocating
Before packing boxes, try negotiating your current rent. Many landlords would rather cut a deal than hunt for new tenants.
- Request a rent reduction from your landlord
- Look into subletting options (split day/night usage)
- Boost revenue from your current spot (delivery, catering, private events)
Data drives smart decisions
This calculation demands precise numbers about your profit margins, fixed costs, and variable expenses. Guessing puts your business at risk.
Food cost tracking systems help you see your exact gross profit margin per dish and model different scenarios. Having solid data gives you confidence for such a major business decision.
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How do you calculate whether moving is smart? (step by step)
Calculate your current gross profit margin
Add up all variable costs (food cost, packaging, delivery) and subtract from 100%. Use this percentage in the break-even formula.
Determine the monthly rent difference
Subtract the new rent from your current rent. This amount is your monthly savings that you can 'trade' for revenue loss.
Calculate the break-even revenue loss
Divide the rent difference by your gross profit margin percentage. This is the maximum revenue loss you can have without being worse off.
Estimate realistic revenue scenarios
Create three scenarios for your new revenue: optimistic, realistic, and pessimistic. Compare these with your break-even point.
Factor in moving costs and ramp-up period
Add up all one-time costs and plan for 3-6 months of lower revenue. Check if your cashflow can handle this.
✨ Pro tip
Run a 4-week revenue test at your potential new location if possible through catering or pop-ups. Real customer data beats estimates every time.
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
How much revenue can I lose with a rent reduction of €3,000?
How long does it take for a new location to reach full revenue?
How do I factor moving costs into this decision?
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
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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