Fixed costs can make or break your break-even. Many hospitality entrepreneurs know what they spend, but not which cost item has the biggest impact on their profit point. In this article, you'll learn step-by-step how to calculate which fixed costs influence your break-even the most.
What are fixed costs and why are they important?
Fixed costs are expenses you have every month, regardless of how many guests you serve. Think rent, insurance, subscriptions, and fixed staff costs. These costs determine how much revenue you need at minimum to break even.
💡 Example:
Restaurant with €8,000 fixed costs per month:
- Rent: €3,500
- Staff (fixed): €2,800
- Insurance: €400
- Energy: €800
- Other: €500
At 25% net margin you need €32,000 revenue to break even.
The impact formula for fixed costs
To calculate which cost item has the biggest impact, use this formula:
Impact = (Cost item / Total fixed costs) × 100
But that doesn't tell the whole story. More important is how much extra revenue you need if this cost item increases:
Extra revenue needed = Cost increase / Net margin %
💡 Example:
Your rent increases from €3,500 to €4,000 (€500 more).
At a net margin of 25%:
€500 / 0.25 = €2,000 extra revenue per month needed
Rank your fixed costs by controllability
Not all fixed costs are equally easy to change. Make a distinction between:
- Hard to change: Rent, insurance, depreciation
- Moderately controllable: Energy, phone, software subscriptions
- Highly controllable: Marketing, external services, other subscriptions
Focus first on cost items that are both high and controllable.
⚠️ Note:
Don't automatically go for the highest cost item. Rent of €4,000 that's fixed for 5 years has less impact than €800 energy costs you can cut in half.
Calculate the break-even impact per euro
For each cost item you can calculate how much extra revenue you need per euro of cost increase:
💡 Example calculation:
At 25% net margin, every extra euro in costs means:
- €1 more rent = €4 more revenue needed
- €1 more energy = €4 more revenue needed
- €1 more insurance = €4 more revenue needed
So it's about which one you can most easily influence.
Prioritize based on savings potential
For each cost item, estimate the savings potential:
- Energy: Often 20-40% savings possible
- Insurance: 10-20% by comparing
- Software/subscriptions: 30-50% by cleaning up
- External services: 20-30% by renegotiating
Multiply this by your current costs to see the absolute savings potential.
KitchenNmbrs and cost management
With a system like KitchenNmbrs you can not only track your food cost, but also monitor your fixed costs. You see directly which cost items are rising and can adjust faster before it affects your break-even.
How do you calculate which fixed cost item has the most impact?
Create an overview of all fixed costs
List all monthly fixed costs: rent, staff, insurance, energy, subscriptions. Add them up for your total fixed costs per month.
Calculate your net margin percentage
Divide your net profit by your revenue. If you make €10,000 profit on €50,000 revenue, your net margin is 20%. You need this for the impact calculation.
Calculate the revenue impact per cost item
For each cost item: divide by your net margin. €1,000 rent at 20% margin means €5,000 revenue needed. This shows you which cost item has the biggest revenue impact.
Assess controllability
Give each cost item a score of 1-5 for how easily you can reduce it. Rent often gets a 1, energy usually a 4. Focus on high impact + high controllability.
✨ Pro tip
Focus on the top 3 cost items that together make up 60-70% of your fixed costs. A 10% saving on these three has more impact than 50% savings on small cost items.
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
Which fixed cost item usually has the biggest impact?
Rent is often the largest cost item (30-40% of fixed costs), but energy and staff often have more savings potential. Focus on what you can influence.
How often should I recalculate my fixed costs?
Check your fixed costs every quarter. Energy, insurance, and subscription prices change regularly. A €200 monthly increase costs you €800 extra revenue at 25% margin.
Should I include depreciation in this calculation?
For break-even analysis only include actual expenses. Depreciation is accounting-based, but doesn't cost cash. Focus on what you actually pay per month.
What if my net margin is very low?
At a low net margin (under 15%), every cost increase has huge impact. €100 more costs at 10% margin means €1,000 more revenue needed. Fix your margin first.
How do I calculate the effect of seasonal fluctuations?
Calculate your break-even for your lowest month. If you do €20,000 revenue in January, your fixed costs need to be adjusted for that. Summer months don't always compensate.
📚 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
- Warenwetbesluit Bereiding en behandeling van levensmiddelen (2024) — Official source
- WHO — Foodborne diseases estimates (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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