Break-even is the point where your revenue equals your costs. Many restaurant owners don't know how much they need to sell minimum to break even, which means they find out too late that they're losing money. Master the exact formula and apply it to your own business.
The break-even formula
Calculating break-even is actually simple. You divide your fixed costs by your contribution margin percentage:
Break-even revenue = Fixed costs / (Contribution margin % / 100)
Where contribution margin = revenue minus variable costs (ingredients, packaging, etc.)
💡 Example:
A bistro with these monthly costs:
- Rent: €3.500
- Staff: €8.000
- Energy: €800
- Other fixed costs: €1.200
Total fixed costs: €13.500
Average food cost: 30% (so 70% contribution margin)
Break-even: €13.500 / 0,70 = €19.286 per month
What are fixed and variable costs?
Fixed costs you pay regardless of how much you sell:
- Rent and mortgage
- Fixed staff (salary)
- Insurance
- Energy (base consumption)
- Software subscriptions
- Phone and internet
Variable costs increase with your revenue:
- Ingredients (food cost)
- Packaging materials
- Extra staff (casual workers)
- Credit card fees
- Delivery platform fees
Calculating contribution margin
Your contribution margin is what's left after variable costs. This needs to cover your fixed costs:
Contribution margin % = 100% - Variable costs %
💡 Example calculation:
If your variable costs are 35% of your revenue:
- Food cost: 30%
- Packaging: 2%
- Platform fees: 3%
Then your contribution margin is: 100% - 35% = 65%
⚠️ Note:
Always calculate with revenue excluding VAT. The VAT you collect must be remitted to the tax authority.
Break-even in covers
You can also calculate break-even in number of guests per day:
Break-even covers = Break-even revenue / Average bill
💡 Practical example:
Break-even revenue: €19.286 per month
Average bill: €32 (excl. VAT)
Open 26 days per month
€19.286 / €32 = 603 covers per month
603 / 26 days = 23 guests per day to break even
Building in safety margins
After managing kitchen operations for nearly a decade, I've learned that you should never rely on exactly breaking even. Build in margins for:
- Seasonal dips (summer, Christmas)
- Unexpected costs (repairs)
- Staff illness
- Economic headwinds
A healthy margin is 20-30% above break-even. In the example above: at least 30 covers per day instead of 23.
Digital support
With a system like KitchenNmbrs you see your food cost percentage directly and can calculate different scenarios. This way you always know how much you need to sell minimum.
How do you calculate break-even? (step by step)
Inventory all fixed costs
Make a list of all costs you pay every month, regardless of your revenue. Think of rent, fixed staff, insurance, energy and software subscriptions. Add these up for your total fixed costs per month.
Calculate your variable costs percentage
Look at your food cost, packaging costs and other costs that increase with your revenue. Add these percentages together. If your food cost is 30% and other variable costs are 5%, then your total variable costs are 35%.
Apply the break-even formula
Divide your fixed costs by your contribution margin percentage (100% minus variable costs percentage). This gives you minimum revenue per month. Divide by your average bill for the number of required covers.
✨ Pro tip
Track your break-even progress weekly by the 15th of each month. If you're 40% behind your monthly target by mid-month, you still have 2 weeks to implement targeted promotions or cost adjustments.
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 excluding VAT. The VAT you collect must be remitted to the tax authority, so it's not real revenue for you.
What if my fixed costs suddenly increase?
Then you need to recalculate your break-even. A rent increase of €500 means you need to generate an additional €500 divided by your contribution margin percentage in revenue.
How often should I recalculate my break-even?
At least every quarter, or immediately after major changes in costs or prices. Many entrepreneurs do this monthly to stay on top of things.
Is break-even the same as profitability?
No, break-even is breaking even. For profit you need to sell above your break-even point. Aim for at least 20-30% above break-even for a healthy margin.
What if I'm below my break-even?
Then you're losing money. You need to either increase your revenue (more guests, higher prices) or lower your costs (lower food cost, fewer fixed costs).
How do seasonal restaurants handle break-even calculations?
Calculate break-even for your operating months only, not the full year. Factor in higher fixed costs during closed periods by spreading them across active months.
Can I use break-even analysis for menu pricing decisions?
Absolutely. Calculate the contribution margin per dish and see how many portions you need to cover daily fixed costs. This helps identify which items truly drive profitability.
📚 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 →