How to calculate the break-even point for a restaurant
The break-even point is the minimum amount of sales needed to cover all costs. Calculating it wrong is the number one cause of nasty surprises at the end of the month.
Before you can know whether your restaurant is profitable, you need to know how much you have to sell just to avoid losing money. That number has a name: the break-even point. And most restaurant owners have never calculated it.
The basic formula
Break-even point = Total fixed costs ÷ Contribution margin
Where contribution margin = (Sales − Variable costs) ÷ Sales
Example: if you have €8,000 in monthly fixed costs (rent, utilities, loan repayments) and a contribution margin of 60%, your break-even point is €8,000 ÷ 0.60 = €13,333 in monthly sales.
Fixed costs vs. variable costs
Fixed costs: rent, equipment depreciation, insurance, licences, internet, salaried permanent staff.
Variable costs: ingredients (food cost + beverage cost), the variable portion of labour (overtime, casual staff), packaging, and kitchen consumables.
The most common confusion is treating all labour as 100% fixed. In hospitality, a meaningful portion is variable — casual shifts, overtime, and seasonal staff should go in the variable column.
Break-even in covers
It's also useful to express the break-even point as a number of daily covers. If your average spend is €24 and you need €13,333 per month:
13,333 ÷ 24 = 556 covers per month 556 ÷ 26 days = 21.4 covers per day
That figure tells you whether your capacity and current occupancy are enough to cover costs.
Why the break-even point changes
The break-even point isn't static. It rises when: - Rent increases at lease renewal - You hire additional permanent staff - Food cost rises due to ingredient inflation without a corresponding price increase
It falls when: - You negotiate better terms with suppliers - You remove dishes with high food cost and low margin - You optimise shifts and reduce variable hours
The relationship with food cost
A lower food cost reduces variable costs, increases the contribution margin, and brings the break-even point down. In a restaurant with €20,000 in monthly sales, reducing food cost from 35% to 31% frees up €800 per month — which flows directly to the bottom line.
Calculating it with Kitchen Stocker
Kitchen Stocker includes a break-even calculator in the reports module: you enter your fixed costs, the system pulls your actual food cost for the period, and automatically calculates how much you need to sell to cover all costs. With live data — not last year's estimates.
Kitchen Stocker calculates this automatically
No spreadsheets. No manual calculations. Real data every day.
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