Your restaurant’s break-even point
Enter your fixed costs, your average spend per cover and what goes on variable costs. You’ll see how many covers you need to stop losing money, and how many to make the profit you want.
How to use the calculator
- Enter your fixed costs for a normal month: rent, staff with their employer costs, utilities, business rates and insurance, loans and the rest. Add or remove lines. If a cost is yearly, divide it by 12.
- Enter your average spend per cover, ex VAT: what you take in a month, without VAT, divided by the number of covers you serve.
- Enter your variable costs as a percentage of sales ex VAT: food and drink, plus card fees, delivery commission, packaging and anything else that grows with each cover.
- Enter the days you open each month and the services per day. If you like, add the profit you’re aiming for and the number of seats, to see the occupancy you need.
The formulas
- Contribution margin per cover = average spend ex VAT × (1 − variable costs). With a £25 average spend and 35% variable costs, each cover leaves £16.25.
- Covers a month to break even = fixed costs ÷ margin per cover.
- With profit = (fixed costs + the profit you want) ÷ margin per cover.
- Per day = covers a month ÷ days open. Per service = covers a day ÷ services a day.
- Break-even revenue = covers a month × average spend, which is the same as fixed costs ÷ (1 − variable costs).
Covers are rounded up: if you need 47.2 a day, 47 won’t get you there. The profit shown is before tax; what you pay in income tax or corporation tax depends on your situation, and your accountant can tell you.
Fixed and variable: what goes where
The question is simple: does this cost go up if I serve more covers? If it does, it’s variable; if you pay the same with the dining room full or empty, it’s fixed. Some sit in between, like energy or extra staff hours in the busy season. If they change little from month to month, treat them as fixed at a normal month’s amount; if they change a lot, run the numbers for a quiet month and a busy one.
You don’t have to guess your food cost percentage: add up a month’s food and drink purchases and divide by that month’s sales ex VAT. Dish by dish, use the recipe cost calculator and, for drinks, the pour cost calculator.
How to lower your break-even point
There are three levers, and each one moves the result in a different way. Try each change in the calculator:
- Raise the margin per cover with well-worked prices and dishes that make more. We explain it in how to price a menu.
- Raise the average spend with what guests add on: dessert, coffee, a second drink. Menu engineering helps you push what makes the most.
- Review your fixed costs: energy, insurance, software and contracts that renew themselves.
If you run a set lunch, work out its price and cost separately: how to put together a set lunch menu helps with that.
Frequently asked questions
What is a restaurant’s break-even point?
It’s the number of covers, or the revenue, at which you cover all your costs for the month without making or losing money. Below it you lose money; above it, the margin on every extra cover is profit.
Should the average spend include VAT?
No. The VAT you charge isn’t yours: you pay it over to HMRC. If you take the average spend from your till, which usually includes VAT, divide it by 1.20 before entering it. In the US, use the check average before sales tax.
What counts as a variable cost?
Anything that goes up or down with each cover you serve: food and drink, card fees and delivery platform commission, takeaway packaging, paper napkins. Rent, fixed wages or your insurance cost the same with the dining room full or empty: they’re fixed.
Does my own pay go in the fixed costs?
If you work in the business, yes: enter what you need to take home each month as one more fixed-cost line. Otherwise the break-even point will tell you the business covers its costs when you’re really working for free. The target profit is what you want on top of that.
Are my numbers saved?
They’re saved only in this browser, so they’re there when you come back. Nothing is sent to a server and you don’t need to sign up.