Think of break-even as your restaurant's survival threshold. Just like a swimmer needs to stay above water to breathe, your business needs revenue above this point to thrive. Drop below it, and you're drowning in losses.
What exactly is break-even?
Break-even is the point where your revenue exactly equals your total costs. You make no profit, but also no loss. Everything you earn above that is pure profit.
💡 Example:
Restaurant The Feast House has these monthly costs:
- Rent: €3,500
- Staff: €8,000
- Insurance: €400
- Energy: €1,200
- Other fixed costs: €900
Total fixed costs: €14,000 per month
Gather your fixed costs
Fixed costs hit you every month, regardless of how many guests walk through your door. These expenses stay the same if you serve 50 covers or 500.
Main fixed costs:
- Rent or mortgage on your premises
- Fixed staff (owner salary, permanent employees)
- Insurance (liability, inventory, fire)
- Energy (gas, water, electricity - base consumption)
- Phone, internet, software subscriptions
- Depreciation on equipment
- Accountant, administration
Calculate your variable costs percentage
Variable costs grow with your revenue. The more you sell, the higher these costs climb. They're expressed as a percentage of your revenue.
💡 Example variable costs:
- Food cost: 30% of revenue
- Extra staff (casual workers): 8% of revenue
- Payment fees (card, credit): 2% of revenue
- Marketing: 3% of revenue
Total variable: 43% of revenue
The break-even formula
Now you can calculate your break-even revenue with this formula:
Break-even revenue = Fixed costs / (1 - Variable costs %)
💡 Calculation for Restaurant The Feast House:
Fixed costs: €14,000
Variable costs: 43% = 0.43
Break-even = €14,000 / (1 - 0.43)
Break-even = €14,000 / 0.57
Break-even = €24,561 per month
This restaurant needs to generate at least €24,561 in revenue to break even.
⚠️ Note:
Always calculate with revenue including VAT, because you pay your fixed costs from your gross income too. Your variable costs percentages should also be based on gross revenue.
From month to day and week
Converting your monthly break-even to daily and weekly gives you more actionable insight:
- Per day: Monthly break-even / 30 days
- Per working day: Monthly break-even / number of working days
- Per week: Monthly break-even / 4.33 weeks
💡 Example daily break-even:
Restaurant The Feast House is open 6 days a week (26 days per month):
€24,561 / 26 days = €945 per day
Every day under €945 in revenue means a loss. Every euro above that is profit.
Break-even in number of covers
To convert your break-even to number of guests, divide by your average check:
Break-even covers = Break-even revenue / Average check
💡 Example in covers:
Average check at Restaurant The Feast House: €35
€945 / €35 = 27 covers per day
Fewer than 27 guests per day = loss. More than 27 = profit.
What if you're above break-even?
Every euro in revenue above your break-even point is almost pure profit. From that extra euro, you only need to deduct the variable costs. This is the kind of thing you only learn after closing your first month at a loss - those extra sales become incredibly valuable once you've covered your bases.
💡 Profit calculation:
Restaurant The Feast House generates €30,000 in revenue (€5,439 above break-even)
Variable costs on extra revenue: €5,439 × 43% = €2,339
Profit: €5,439 - €2,339 = €3,100
Use break-even for decision-making
Your break-even figure helps with important decisions:
- Opening hours: Is it worth being open on Monday?
- Staff scheduling: How much revenue do you need to make extra staff profitable?
- Marketing: How many extra guests does a campaign need to generate?
- Investments: What does a new machine mean for your break-even?
Most restaurants track these numbers manually or use specialized software to monitor their break-even performance in real-time.
How do you calculate your break-even point? (step by step)
Add up all your fixed costs
Make a list of all costs you have every month, regardless of your revenue. Think about rent, fixed staff, insurance, energy, and administration costs. Add these together for your total fixed costs per month.
Calculate your variable costs percentage
Determine what percentage of your revenue goes to variable costs. These are costs that increase with your sales, such as food cost, casual staff, and payment fees. Express this as a percentage of your total revenue.
Apply the break-even formula
Divide your fixed costs by (1 minus your variable costs percentage). The result is your minimum monthly revenue to break even. Convert this to daily or weekly for more practical insight.
✨ Pro tip
Calculate your break-even hourly for 14 consecutive service periods to identify your most profitable time slots. You'll spot exactly which lunch or dinner shifts consistently underperform.
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
Should I include VAT in my break-even calculation?
Yes, calculate with revenue including VAT. You pay your fixed costs from your gross income too, so your break-even should also be gross.
What if my costs vary every month?
Then take the average of the past 6-12 months. For seasonal businesses, you can calculate separate break-even points for busy and quiet periods.
How often should I recalculate my break-even?
Check your break-even at least every 3 months or when your costs change significantly. When suppliers raise prices or wages increase, you need to recalculate.
What if I'm below my break-even?
Then you're running at a loss and need to take action. Increase your revenue by attracting more guests or higher checks, or reduce your costs where possible.
Can I have different break-even points per day?
Absolutely. If you use less staff on Monday than on Saturday, you have different fixed costs and therefore a different break-even point per day.
How do I factor in equipment depreciation?
Include depreciation as a fixed monthly cost by dividing your equipment's purchase price by its expected lifespan in months. A €12,000 oven lasting 5 years adds €200 monthly to your fixed costs.
📚 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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