Calculating break-even for a new concept is crucial to know how much revenue you need at minimum. Some operators launch with spreadsheets full of projections, while others wing it completely. But without concrete numbers, you'll burn through cash for months wondering why you're bleeding money.
What is break-even for a new concept?
Break-even is the exact point where your total income equals your total costs. Not making money yet, but not losing it either. For your new restaurant, it means figuring out the absolute minimum revenue needed to keep the lights on and doors open.
💡 Example:
You start a new pizzeria with these fixed costs per month:
- Rent: €3.500
- Staff: €8.000
- Insurance: €400
- Gas/water/electricity: €1.200
- Other costs: €900
Total fixed costs: €14.000 per month
Gather your fixed costs
Start by listing every expense that hits you monthly, regardless of how many customers walk through your door. These costs don't care if you serve ten people or three hundred—they're there every single month.
- Rent and rental costs: Including service charges, parking spaces
- Staff costs: Gross wages + employer contributions (add 30% on top of gross wages)
- Insurance: Business liability, inventory, legal assistance
- Energy: Gas, water, electricity - estimate conservatively
- Other fixed costs: Phone, internet, accountant, software subscriptions
⚠️ Watch out:
Don't forget hidden costs like repairs, maintenance, and replacements. Add an extra 10-15% for unexpected expenses.
Determine your average gross margin
Even without sales history, you can calculate your gross margin. This is what's left after subtracting variable costs—ingredients, packaging, payment processing fees.
💡 Pizzeria example:
Average pizza selling price: €16.50 incl. VAT (€15.14 excl. VAT)
- Ingredients per pizza: €4.50
- Packaging: €0.30
- Payment fees (2%): €0.30
Gross margin per pizza: €15.14 - €5.10 = €10.04
Gross margin percentage: 66%
Calculate your break-even revenue
Now you can figure out exactly how much revenue you need monthly to break even. It's the kind of thing you only learn after closing your first month at a loss—painful but educational.
Formula: Break-even revenue = Fixed costs / (Gross margin % / 100)
💡 Pizzeria calculation:
Fixed costs: €14.000 per month
Gross margin: 66%
Break-even revenue: €14.000 / 0.66 = €21.212 per month
This means: 1.285 pizzas per month or 43 pizzas per day (at 30 days open)
Create different scenarios
Since your revenue's a big question mark, build three scenarios: pessimistic, realistic, and optimistic. Calculate if you'll hit break-even in each one.
- Pessimistic: 50% of your expected revenue
- Realistic: 75% of your expected revenue
- Optimistic: 100% of your expected revenue
⚠️ Watch out:
New concepts often only reach their full potential after 6-12 months. Plan sufficient buffer for the startup period.
Check your assumptions monthly
Once you've got real revenue data, compare it against your break-even calculations. Adjust your assumptions based on actual numbers, not what you hoped would happen.
- Is your average check value higher or lower than expected?
- Are your ingredient costs different than estimated?
- Do you have unexpected fixed costs?
Food cost tracking software can help you monitor actual margins and costs, so you'll quickly spot when reality diverges from your break-even projections.
How do you calculate break-even for a new concept?
Make a list of all fixed costs
Add up all costs you have every month, regardless of your revenue. Think about rent, staff, insurance, energy, and add 15% extra for unexpected costs.
Calculate your expected gross margin percentage
Determine your average selling price and subtract your variable costs (ingredients, packaging, payment fees). Divide the result by your selling price to get your gross margin percentage.
Calculate your break-even revenue
Divide your total fixed costs by your gross margin percentage. This gives you the minimum revenue you need to cover all costs.
Create three scenarios
Calculate break-even for a pessimistic (50%), realistic (75%), and optimistic (100%) scenario. This helps you estimate how much buffer you need.
Check your assumptions monthly
Compare your actual figures with your break-even calculation. Adjust your assumptions if your check value, costs, or margins turn out different than expected.
✨ Pro tip
Track your daily sales against break-even targets for the first 90 days. If you're consistently hitting less than 70% of your break-even number by day 60, you need to act fast on costs or pricing.
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
What if I have no idea what my expected revenue will be?
Research similar businesses in your area and estimate conservatively. Start with 50% of what successful concepts achieve and work from there. Better to be cautious than overly optimistic.
Should I include VAT in my break-even calculation?
Always calculate excluding VAT. The VAT you collect must be remitted to tax authorities, so that's not real revenue for your business.
How long does it take for a new concept to break even?
Typically 6-12 months, depending on your concept and location. The first months you'll often run losses due to startup costs and building customer awareness.
What if my break-even revenue seems unrealistically high?
Then your fixed costs are too high or your margins too low. Consider reducing expenses or adjusting prices before opening.
How do I account for seasonal fluctuations in my break-even analysis?
Calculate break-even for your slowest expected month, not your average month. This ensures you can survive the lean periods without running out of cash.
Should I factor in loan payments when calculating break-even?
Yes, loan payments are fixed monthly expenses that must be covered. Include principal and interest payments in your fixed cost calculations.
How often should I recalculate my break-even point?
Monthly during your first year, then quarterly once you're established. Recalculate immediately if there are significant changes in costs or pricing.
📚 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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