Picture this: you're three months into running your dream restaurant, but the numbers aren't adding up. You're serving customers daily, yet money keeps flowing out faster than it comes in. The culprit? You never calculated the minimum revenue needed to keep your doors open and pay yourself a decent wage.
What is your break-even point?
Your break-even point represents the minimum monthly revenue where you cover every expense and can pay yourself a reasonable salary. Fall below this number, and you're losing money. Exceed it, and you're finally turning a profit.
💡 Example:
Restaurant with 40 seats:
- Rent: €3,500
- Staff: €12,000
- Food cost (30%): €6,000
- Other costs: €2,500
- Your salary: €4,000
Minimum revenue: €28,000 per month
Gather your fixed costs
Start by listing every expense you must pay monthly, regardless of customer volume. These fixed costs form your foundation:
- Rent and rental costs (including service charges, water, gas, electricity)
- Insurance (business, liability, inventory)
- Fixed staff (yourself, permanent employees, payroll taxes)
- Subscriptions (phone, internet, software, alarm system)
- Depreciation (kitchen equipment, furniture)
- Administration and accounting
⚠️ Attention:
Don't forget your own salary! Many entrepreneurs skip this and end up working for free.
Calculate your variable costs
Variable costs grow alongside your revenue. These are the main ones you'll encounter:
- Food cost: typically 28-35% of revenue
- Extra staff: additional help during peak hours
- Card payment fees: roughly 0.3% of revenue
- Beverage purchases: for bars/cafés 18-25% of beverage revenue
💡 Example calculation:
At €20,000 revenue:
- Food cost 30%: €6,000
- Extra staff: €1,500
- Card fees: €60
Total variable costs: €7,560 (37.8%)
The break-even formula
Now you can determine your minimum revenue using this straightforward formula:
Minimum revenue = Fixed costs / (1 - Variable costs %)
Variable costs % equals your variable costs divided by total revenue.
💡 Complete example:
Restaurant with:
- Fixed costs: €18,000
- Variable costs: 38% of revenue
Calculation: €18,000 / (1 - 0.38) = €18,000 / 0.62 = €29,032
You need a minimum of €29,032 in revenue to break even.
Check if it's realistic
Verify your break-even revenue matches your seating capacity and operating hours:
- Number of seats × average check × number of seatings × occupancy rate
- Average occupancy rate for restaurants: 60-80%
- Average check casual dining: €25-35
⚠️ Attention:
If your break-even exceeds what's realistically achievable, you must reduce costs or modify your concept.
What if your break-even is too high?
If your minimum revenue proves unrealistically high, consider these solutions:
- Lower fixed costs: negotiate cheaper rent, reduce permanent staff
- Optimize food cost: menu engineering, smarter purchasing
- Increase average check: strategic price adjustments, effective upselling
- More seats: redesign for efficiency
- Extended hours: add lunch service, stay open later
A pattern we see repeatedly in restaurant financials shows that operators who track their food costs weekly rather than monthly can reduce expenses by 3-5%. Monitoring cost prices precisely helps you spot optimization opportunities quickly and accurately.
How do you calculate your break-even point? (step by step)
Make a list of all your fixed costs
Add up all monthly costs you must pay regardless of your revenue: rent, insurance, fixed staff, subscriptions, and your own salary. Don't miss any cost item.
Calculate your variable costs percentage
Determine what percentage of your revenue goes to variable costs. Add up food cost (28-35%), extra staff during busy times, and card fees.
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.
✨ Pro tip
Track your actual revenue against your calculated break-even for 90 consecutive days. If you're consistently falling short by more than 10%, prioritize immediate cost reduction over any expansion plans.
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 my own salary in the calculation?
Absolutely yes. Your salary represents a real business expense that many entrepreneurs overlook. Without including it, you might think you're profitable while actually working for free.
What if my break-even exceeds what I can realistically generate?
You'll need to either cut costs or boost revenue potential. Consider negotiating lower rent, reducing food costs, raising prices strategically, or adding more seats. Sometimes this means fundamentally adjusting your restaurant concept.
How often should I recalculate my break-even point?
Recalculate every 6 months minimum, or after major cost changes like rent increases or staff additions. Your expenses shift more frequently than most operators realize, making regular updates crucial.
Is 30% food cost a reliable assumption for planning?
For most restaurants, yes. Fine dining typically runs 28-32%, while casual dining spans 28-35%. However, you should track your actual percentages and adjust calculations accordingly rather than relying on industry averages alone.
Should I include VAT in my break-even calculation?
Never include VAT in your calculations. The VAT you collect goes directly to tax authorities, so it doesn't contribute to covering your actual business expenses or break-even point.
What's the difference between break-even and profit targets?
Break-even covers all costs including your salary but generates zero additional profit. Most viable restaurants need 15-20% above break-even to reinvest in equipment, handle emergencies, and grow sustainably.
How do seasonal fluctuations affect break-even calculations?
Calculate break-even using your average monthly figures, but also determine your peak and slow season requirements. Many restaurants need 40% above break-even during busy months to survive the slower periods.
📚 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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