Here's what most restaurant owners won't admit: they're flying blind without knowing their break-even point. You might think you're profitable, but without this crucial number, you could be bleeding money for months. Break-even is simply where your revenue equals your total costs - no profit, no loss.
What is break-even and why is it crucial?
Break-even is the revenue level where you make neither profit nor loss. All costs are covered, but nothing's left over. It's your absolute minimum to survive.
Many entrepreneurs think: "If I just generate enough revenue, it'll be fine." But without knowing what your break-even point is, you can run losses for months without realizing it.
Fixed costs vs. variable costs
For an accurate break-even calculation, you need to divide all your costs into two groups:
💡 Fixed costs (stay the same):
- Rent: €4,500
- Staff (permanent): €12,000
- Insurance: €800
- Energy (base): €1,200
- Depreciation: €1,500
Total fixed: €20,000/month
💡 Variable costs (increase with revenue):
- Food cost: 30% of revenue
- Extra staff: 8% of revenue
- Credit card fees: 2% of revenue
Total variable: 40% of revenue
The break-even formula
The formula for break-even revenue is:
Break-even revenue = Fixed costs / (100% - Variable costs %)
Using the example above:
- Fixed costs: €20,000
- Variable costs: 40%
- Coverage: 100% - 40% = 60%
Break-even = €20,000 / 0.60 = €33,333 per month
⚠️ Note:
Always calculate with revenue excluding VAT. The €33,333 is what comes into your till, not what you pass on to tax authorities.
Gathering all cost items
To calculate a reliable break-even, you need to include all costs. Many entrepreneurs forget cost items:
Fixed costs checklist:
- Rent and service charges
- Permanent staff (gross salary + employer contributions)
- Insurance (liability, inventory, disability)
- Energy (base subscription + estimated consumption)
- Phone, internet, software subscriptions
- Depreciation of inventory and fixtures
- Accountant, administration
- Marketing (fixed budgets)
- Maintenance and repairs (average per month)
Variable costs checklist:
- Food cost (ingredients as % of revenue)
- Extra staff (temp workers, on-call staff)
- Credit card and PIN fees
- Delivery costs (if you deliver)
- Extra energy at higher revenue
- Packaging materials
💡 Realistic restaurant example:
Restaurant with 60 seats, open 6 days:
- Fixed costs: €28,500/month
- Variable costs: 45% (food cost 32%, staff 10%, other 3%)
- Coverage: 55%
Break-even: €28,500 / 0.55 = €51,818/month
That's €1,727 per day, or €288 per opening day.
Converting break-even revenue to practice
A break-even amount feels abstract. Make it concrete:
- Per day: €51,818 / 30 days = €1,727
- Per opening day: €1,727 / 6 days = €288 per day
- Per table: €288 / 60 tables = €4.80 per table per day
- Average bill: At €25 average bill = 69 guests per day
Now you know: you need a minimum of 69 guests per day to break even. From tracking this across dozens of restaurants, the owners who convert their break-even to daily guest counts stay much more aware of their performance.
⚠️ Note:
Break-even isn't profit! It's the point where you don't go bankrupt. For a healthy business you want to be at least 15-20% above your break-even.
Including seasons and fluctuations
Most restaurants have seasonal variations. So also calculate your break-even for quiet months:
- January and February: often 30% less revenue
- Summer months: possibly 20% more revenue
- Holidays: extreme peaks and troughs
Calculate a break-even for your worst month. If you can achieve that, you'll survive the whole year.
Lowering break-even: two strategies
If your break-even feels too high, you've got two options:
1. Lower fixed costs:
- Negotiate lower rent
- Less permanent staff, more flexible
- Cheaper suppliers for fixed services
2. Lower variable costs:
- Reduce food cost (better purchasing, less waste)
- Work more efficiently (less staff per revenue)
Lowering fixed costs has more impact on your break-even than variable costs. A food cost calculator like KitchenNmbrs can help track your variable costs more precisely.
How do you calculate your break-even monthly revenue? (step by step)
Gather all your fixed costs per month
Make a list of all costs you pay every month, regardless of your revenue. Think of rent, permanent staff, insurance, energy (base subscription), depreciation and administration costs. Add everything up to one amount per month.
Calculate your variable costs as a percentage
Determine what percentage of your revenue goes to variable costs. These are usually food cost (25-35%), extra staff (5-15%), and other costs like credit card fees (1-3%). Add all percentages together.
Apply the break-even formula
Divide your total fixed costs by (100% minus your variable costs percentage). For example: €20,000 fixed costs and 40% variable costs becomes €20,000 / 0.60 = €33,333 break-even revenue per month.
✨ Pro tip
Calculate your break-even for the next 6 months including any planned cost increases like rent hikes or wage raises. This gives you a realistic target and prevents nasty surprises mid-year.
Calculate this yourself?
In the KitchenNmbrs app you can do this in just a few clicks. 7 days free, no credit card.
Was this article helpful?
Frequently asked questions
Should I include VAT in my break-even calculation?
No, always calculate with revenue excluding VAT. The VAT you collect gets passed on to tax authorities, so it doesn't count towards your break-even. Always use net revenue in your calculation.
What if my costs differ every month?
Take the average of the last 12 months for your fixed costs. For seasonal restaurants, also calculate a break-even for your worst months, so you know what you need at minimum to survive.
How often should I recalculate my break-even?
At least every quarter, or whenever there are major changes in rent, staff or supplier prices. Your break-even point shifts when your cost structure changes, so keep it current.
Is break-even the same as making profit?
No, break-even means you're exactly breaking even - nothing's left over, but you're not making a loss either. For a healthy business you want to be 15-20% above your break-even to make actual profit.
What if my calculated break-even seems unachievable?
Then you need to adjust your cost structure immediately. Lower your fixed costs (negotiate rent, reduce permanent staff) or your variable costs (cut food cost, improve efficiency). An unachievable break-even is a red flag.
Should I calculate break-even differently for delivery vs dine-in revenue?
Yes, delivery typically has different variable costs - higher packaging costs, delivery fees, and commission to platforms. Calculate separate break-evens for each revenue stream to understand which is more profitable.
📚 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.
Calculate your break-even point in seconds
Food cost is just one part of the story. KitchenNmbrs also helps you structure labor costs and other expenses for a complete break-even overview. Start free.
Start free trial →