Over 60% of restaurants fail within the first three years, often because owners don't track their daily break-even revenue. This critical number tells you exactly how much you must earn each day to cover fixed costs. Without it, you're flying blind until month-end reveals your profit or loss.
What is break-even revenue?
Break-even revenue marks the exact point where your income matches your expenses. You're not making profit, but you're not losing money either. Every dollar you earn beyond this threshold becomes pure profit.
💡 Example:
A restaurant with these monthly fixed costs:
- Rent: €3,500
- Staff: €12,000
- Energy: €800
- Insurance: €400
- Other costs: €1,300
Total fixed costs: €18,000 per month
Collect your fixed costs per month
Fixed costs hit your books every month, regardless of how busy you get. These expenses stay constant if you serve 50 customers or 500.
Main fixed costs:
- Rent and mortgage payments
- Salaried staff wages plus benefits
- Insurance premiums
- Base energy consumption
- Phone, internet, and software subscriptions
- Equipment depreciation
- Accounting and administrative fees
⚠️ Note:
Don't mix in variable costs like ingredients or temporary staff during rush periods.
Calculate your average gross margin
Gross margin shows what's left after you subtract variable costs like food ingredients. You need this percentage to figure out how much of each revenue dollar actually covers fixed expenses.
Gross margin formula:
Gross margin % = ((Revenue - Variable costs) / Revenue) × 100
💡 Example:
Last month's numbers:
- Revenue: €25,000
- Ingredient costs: €8,000
- Extra staff: €2,000
Gross margin: ((€25,000 - €10,000) / €25,000) × 100 = 60%
Calculate your daily break-even
Now you can determine your minimum daily revenue target. From years of working in professional kitchens, I've watched too many operators skip this calculation and wonder why cash flow keeps them awake at night.
Daily break-even formula:
Daily break-even = (Monthly fixed costs / Number of working days) / (Gross margin % / 100)
💡 Example:
Using our previous figures:
- Fixed costs: €18,000 per month
- Working days: 26 per month (6 days/week)
- Gross margin: 60%
Break-even per day: (€18,000 / 26) / 0.60 = €1,154
Check your calculation
Verify your math by testing if this revenue actually achieves break-even status.
💡 Check:
At €1,154 daily revenue:
- Monthly revenue: €1,154 × 26 = €30,004
- Variable costs (40%): €12,002
- Remaining for fixed costs: €18,002
This perfectly covers your €18,000 in fixed costs!
⚠️ Note:
Your break-even varies by day. Mondays typically require less revenue than Saturdays since you'll have fewer staff scheduled.
Use your break-even number
Armed with your minimum daily revenue target, you can manage operations more effectively:
- Track daily performance against your break-even target
- Launch promotional campaigns if you're falling short
- Identify exactly when profits start flowing
- Calculate minimum guest counts needed
Food cost calculators can automatically track your daily revenue against break-even targets, eliminating manual calculations.
How do you calculate your daily break-even? (step by step)
Add up all your fixed costs per month
Write down rent, fixed staff, insurance, energy, phone and all other costs you have every month. Only add costs that don't depend on your revenue.
Calculate your average gross margin percentage
Get your figures from last month: (revenue minus ingredients and variable staff) divided by revenue, times 100. This gives you your gross margin percentage.
Divide fixed costs by working days and gross margin
Divide your monthly fixed costs by the number of days you're open. Divide this result by your gross margin percentage (as a decimal). This is your daily break-even revenue.
✨ Pro tip
Track your revenue every 2 hours during service and compare it to your break-even pace. If you're running behind by 6 PM, immediately activate promotional offers to boost evening sales.
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 my gross margin fluctuates monthly?
Calculate the average from your last 3-6 months of data. If you see major swings, create break-even scenarios for both your highest and lowest margins to establish a working range.
Should I include VAT in break-even calculations?
No, work with pre-VAT figures only. VAT collected gets forwarded to tax authorities, so it doesn't contribute to covering your actual business expenses.
What if I have different staffing costs each day?
Create separate break-even calculations for each day of the week. Your Tuesday break-even with minimal staff will be much lower than your Saturday break-even with full coverage.
How often should I recalculate my break-even?
Update your break-even when fixed costs change significantly - new lease terms, additional salaried staff, or major shifts in your gross margin. Review quarterly at minimum to stay accurate.
📚 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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