How do I calculate a restaurant's break-even point?
Break-even sales = fixed costs / contribution margin ratio, where the contribution margin ratio = 1 - (variable costs as a share of sales). If fixed costs are $30,000/month and variable costs are 65% of sales, break-even = 30,000 / 0.35 = about $85,700 in monthly sales.
What counts as fixed vs variable cost?
Fixed costs stay roughly the same regardless of sales — rent, insurance, salaried managers, loan payments. Variable costs move with sales — food, hourly labor, supplies, credit-card fees. Some labor is semi-fixed; put your best estimate in the variable percentage.
How many covers do I need to break even?
Divide break-even sales by your average check to get covers for the period, then by your operating days to get covers per day. This tool does that when you enter an average check.
Is break-even the same as profitability?
No — break-even is the sales level where you cover all costs with zero profit. To hit a profit target, add the desired profit to fixed costs before dividing by the contribution margin ratio.