Fixed costs drain your bank account every month, regardless of how many customers walk through your doors. Most new restaurant owners underestimate these recurring expenses by 20-40%, leading to cash flow disasters within six months. Building realistic budgets means accounting for every monthly obligation before you flip the "Open" sign.
The main categories of fixed costs
Your fixed expenses fall into several distinct categories. Each one demands careful planning and realistic estimates:
💡 Example: 50-seat bistro
- Rent: €3,500/month
- Insurance: €450/month
- Energy: €800/month
- Phone/internet: €150/month
- Depreciation: €1,200/month
- Financing costs: €600/month
Total fixed costs: €6,700/month
Housing and location
Rent becomes your largest monthly expense in most cases. But landlords love to casually mention maintenance fees, property taxes, and service charges after you've already fallen in love with the space.
- Rent: Keep it between 8-15% of projected revenue
- Utilities: Gas, water, electricity (€500-1,500/month)
- Municipal taxes: Property tax, sewage fees, waste disposal
- Building maintenance: Set aside 1-2% of annual rent
⚠️ Watch out:
Rent exceeding 15% of revenue makes profitability nearly impossible. Calculate this ratio before signing any lease agreement.
Insurance and legal obligations
Restaurant insurance isn't optional - some policies are legally required. Others protect your investment from catastrophic losses:
- Liability, Vehicle, Personal Insurance: €200-400/month
- Business property insurance: €100-300/month
- Inventory insurance: €50-150/month
- Legal assistance insurance: €30-80/month
- Disability insurance: €100-400/month
Equipment and depreciation
Kitchen equipment, furniture, and technology systems lose value over time. You'll spread these costs across multiple years through monthly depreciation.
💡 Depreciation example:
- Kitchen equipment €60,000 over 10 years = €500/month
- Furniture €20,000 over 8 years = €208/month
- POS system €5,000 over 5 years = €83/month
- Renovation €40,000 over 10 years = €333/month
Total depreciation: €1,124/month
Financing costs and interest
Borrowed money creates non-negotiable monthly obligations. Interest rates and payment schedules are locked in regardless of your sales performance.
- Bank loan: Interest plus principal payments per contract
- Equipment lease: Fixed monthly payments
- Credit line: Interest on outstanding balance (variable)
Administration and software
After managing kitchen operations for nearly a decade, I've watched restaurants struggle because they underbudget for administrative expenses:
- POS system: €50-200/month
- Accountant: €150-500/month
- Software subscriptions: €50-300/month combined
- Phone and internet: €100-200/month
💡 Software stack example:
- Food cost tracking: €25/month
- POS system: €80/month
- Reservation platform: €50/month
- Accounting software: €30/month
Pick software that matches your restaurant's size. Enterprise solutions often overwhelm small operations.
Marketing and promotion
Marketing isn't optional anymore - even brand new restaurants need consistent promotional budgets:
- Online marketing: €200-800/month
- Print materials and flyers: €100-300/month
- Website maintenance: €50-150/month
- Social media management tools: €30-100/month
The big picture: what does it really cost?
Here's what you can expect for a typical 50-seat bistro operation:
💡 Total overview 50-seat bistro:
- Housing: €4,200/month
- Insurance: €450/month
- Depreciation: €1,200/month
- Financing: €600/month
- Administration: €350/month
- Marketing: €400/month
Total: €7,200/month fixed costs
With €25 average checks, you need 288 covers monthly just to break even on fixed expenses.
⚠️ Watch out:
These numbers only cover fixed expenses. Add variable costs like food purchases, labor, and taxes. Budget €15,000-20,000/month total operating costs for this size restaurant.
How to build a buffer
Fixed costs don't pause during slow periods, renovations, or unexpected closures. Your cash reserves need to reflect this reality:
- Keep 3 months of fixed costs in cash as your minimum buffer
- Plan for seasonal revenue drops in your cash flow projections
- Spread maintenance expenses across 12 months
- Set aside tax payments (quarterly VAT, annual income tax)
How do you calculate your fixed costs? (step by step)
Make a list of all fixed expenses
Write down all costs you have every month, regardless of your revenue. Think of rent, insurance, depreciation, software, and financing costs.
Calculate depreciation on investments
Divide your investment amounts by the number of years you'll use them. Kitchen equipment typically 8-10 years, furniture 5-8 years.
Check the ratio to expected revenue
Your total fixed costs should be maximum 25-30% of your expected revenue. Otherwise profitability becomes very difficult.
✨ Pro tip
Calculate your fixed cost-per-day breakdown during your first 90 days of operation. If you're not covering €240 daily (for a €7,200 monthly obligation), you'll hit cash flow problems within 6 months.
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
What percentage of my revenue should fixed costs represent?
Target 25-30% of total revenue for fixed costs. Anything above 35% makes profitability extremely difficult, especially during your first year while building customer base.
Should I calculate depreciation even if I bought equipment with cash?
Yes - depreciation reflects equipment wear and replacement needs. Even cash purchases require depreciation accounting to build replacement reserves over time.
How do I handle fixed costs that exceed my initial projections?
First, identify which expenses can be reduced (software subscriptions, marketing) versus non-negotiable costs (rent, insurance). Then adjust your revenue targets or find operational savings elsewhere.
What's the minimum cash buffer I need for fixed costs?
Maintain 3-6 months of fixed costs in cash reserves. Restaurant revenue can stop suddenly due to renovations, seasonal fluctuations, or external circumstances beyond your control.
Are management salaries considered fixed or variable costs?
Management salaries on fixed contracts count as fixed costs since they don't fluctuate with customer volume. Hourly management pay would be variable.
How often should I review and adjust my fixed cost projections?
Review fixed costs quarterly during your first year, then semi-annually once established. Some costs like insurance and rent change annually, while others may increase unexpectedly.
Can I negotiate lower fixed costs after my first year of operation?
Yes, established restaurants have more negotiating power. You can often reduce insurance premiums, renegotiate service contracts, or switch to more cost-effective software solutions once you understand your actual needs.
📚 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 →