Your starting revenue determines whether your restaurant survives or goes bankrupt. Too many new restaurant owners underestimate their required revenue and hit serious cash flow problems within six months. Calculate the minimum revenue needed to cover your fixed costs before you sign that lease.
What are fixed costs in a restaurant?
Fixed costs drain your bank account every month, no matter how many customers show up. These expenses stay constant whether you serve 10 customers or 200.
- Rent: usually your biggest fixed expense
- Staff: base wages for permanent employees
- Insurance: liability, property, inventory coverage
- Utilities: basic equipment operation, lighting
- Subscriptions: internet, phone, software licenses
- Depreciation: kitchen equipment, furniture wear
💡 Example fixed costs small restaurant:
- Rent: €3.500
- Staff (1 FTE): €2.800
- Insurance: €400
- Energy (basic): €600
- Other subscriptions: €300
Total fixed costs: €7.600 per month
The break-even formula for restaurants
To calculate your minimum starting revenue, use this formula:
Minimum revenue = Fixed costs / (1 - Variable costs%)
Variable costs are expenses that increase with higher revenue:
- Food cost: 28-35% of revenue
- Extra staff: 5-15% of revenue (during peak periods)
- Additional utilities: 2-5% of revenue
- Other variable costs: 3-7% of revenue
Total variable costs: typically 40-60% of your revenue
From analyzing actual purchasing data across different restaurant types, most successful establishments maintain variable costs between 45-50% of revenue during their first year.
💡 Example break-even calculation:
Fixed costs: €7.600 per month
Variable costs: 45% of revenue
Calculation:
€7.600 / (1 - 0.45) = €7.600 / 0.55 = €13.818
Minimum monthly revenue: €13.818
⚠️ Note:
This is your break-even point. You're not making any profit yet. For actual profit, you need 15-25% more revenue.
From monthly to daily revenue
Break down your break-even revenue across your opening schedule:
Daily revenue = Monthly revenue / Number of opening days
💡 Example daily revenue:
Monthly revenue: €13.818
Open: 6 days per week = 26 days per month
Calculation:
€13.818 / 26 days = €531 per day
Minimum daily revenue: €531
Check: is this realistic?
Verify if your calculated revenue is actually achievable by examining:
- Number of seats: how many covers can you serve?
- Average check value: what does a guest spend on average?
- Occupancy rate: what percentage full are you?
💡 Reality check:
Restaurant: 40 seats
Average check value: €25
Occupancy rate: 60%
Calculation:
40 × 0.60 = 24 covers per day
24 × €25 = €600 per day
€600 > €531 → Achievable!
⚠️ Note:
If your calculated revenue isn't realistic, you must lower your fixed costs or adjust your concept. Don't start with impossible numbers.
Build in a safety margin
Always calculate with a safety margin of 20-30% above your break-even. Your first months rarely run at full capacity, and unexpected expenses will appear.
Safe starting revenue = Break-even revenue × 1.25
💡 Example with safety margin:
Break-even: €13.818 per month
Safety margin: 25%
Calculation:
€13.818 × 1.25 = €17.273 per month
Safe starting revenue: €17.273 per month
How do you calculate your minimum starting revenue? (step by step)
Make a list of all your fixed costs
Add up all the costs you have to pay every month: rent, staff, insurance, energy, subscriptions, and depreciation. Don't forget small items like accountant or cleaning.
Calculate your variable cost percentage
Estimate what percentage of your revenue goes to food cost (28-35%), extra staff (5-15%), extra energy (2-5%), and other variable costs (3-7%). Add these up to get your total variable cost percentage.
Apply the break-even formula
Divide your fixed costs by (1 minus your variable cost percentage). This gives you the minimum monthly revenue to break even. Add a 20-30% safety margin for a realistic starting revenue.
✨ Pro tip
Track your actual revenue against break-even calculations for the first 90 days. Most restaurants miss their projections by 40% and discover 3-4 hidden variable costs worth 12% of total revenue.
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 calculated revenue is unrealistically high?
Then you need to lower your fixed costs (cheaper location, fewer staff) or adjust your concept (higher average check value, more seats). Never start with unachievable numbers.
Should I include VAT in my revenue calculation?
Calculate with revenue including VAT, because that's what actually comes in. You also pay your fixed costs from your gross income. You'll pass the VAT on to the tax authority later.
How do I know if my variable cost percentage is correct?
Use industry benchmarks: food cost 28-35%, total variable costs 40-60% of revenue. Check with similar restaurants in your area or ask your accountant for reference figures.
Should I account for seasonal differences?
Yes, calculate your break-even for the worst months. If you can break even in January, you'll make money in summer. The other way around doesn't work.
How often should I recalculate my break-even point?
Recalculate monthly during your first year, then quarterly once you're established. Fixed costs change, and your variable cost percentages will improve with experience.
What's the difference between cash flow break-even and accounting break-even?
Cash flow break-even excludes non-cash expenses like depreciation. It's lower than accounting break-even and shows the minimum cash you need to stay operational.
Can I use this formula for delivery-only restaurants?
Yes, but your variable costs will be different - include delivery platform fees (15-30%) and packaging costs (2-5%). Your fixed costs might be lower without front-of-house expenses.
📚 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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