Add your fixed costs and variable cost percentages and see the sales you need per month, per day and per cover just to break even, plus what it takes to hit your profit target.
Costs you pay whether or not anyone walks in.
Costs that rise and fall with every sale.
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It finds the sales level where your restaurant stops losing money, in dollars per month, dollars per day and covers per day, and then shows what the number becomes once you add the profit you actually want. If you enter your current average daily sales, it tells you how many days of the month work for the landlord and how many work for you.
List monthly fixed costs from the P&L: rent, salaried management, insurance, loans and leases, base utilities, software and licenses. Round; precision is not the point.
Enter variable costs as percents of sales. Food and beverage cost together, hourly labor with payroll taxes, and card fees plus supplies. If you track prime cost weekly, you already have most of this.
Add operating days and average check, then a profit target. The covers-per-day figure is the one to give the floor team; the daily dollar figure goes on the manager log.
Contribution margin percent equals 100 minus total variable cost percent. Break-even sales equal fixed costs divided by contribution margin percent. With a profit target, add the target to fixed costs first. Daily break-even equals monthly break-even divided by operating days; covers per day equals daily break-even divided by average check.
Example: $43,000 of monthly fixed costs and 58 percent variable costs gives a 42 percent contribution margin and a break-even of $102,400 a month, $3,940 a day over 26 days, or 94 covers a day at a $42 check. Add a $10,000 profit target and it becomes $126,200 a month, or 115 covers a day. The gap between 94 and 115 is the business plan.
| Variable cost % | Contribution margin | Break-even on $43,000 fixed |
|---|---|---|
| 54% | 46% | $93,500 a month |
| 58% | 42% | $102,400 a month |
| 62% | 38% | $113,200 a month |
| 66% | 34% | $126,500 a month |
Four points of cost control moves break-even by roughly $11,000 a month with nothing else changing. That is why the cost guides on this site matter. The full method is in the break-even guide.
Raise contribution margin: lower food, beverage and hourly labor percents, or take price where the menu can carry it. See menu engineering.
Lower fixed costs: renegotiate the lease at renewal, right-size salaried management, refinance equipment.
Raise average check so the same dollar break-even takes fewer covers: beverage attachment, dessert, a well-built upsell.
Add a daypart only if its contribution beats the fixed cost it adds. Run the calculator for the daypart alone before opening it.
Add up monthly fixed costs (rent, salaried management, insurance, loan payments, base utilities, software, licenses). Work out variable costs as a percent of sales (food and beverage cost, hourly labor with taxes, card fees, paper and supplies). Contribution margin is 100 percent minus variable cost percent. Break-even sales equal fixed costs divided by contribution margin. Divide by operating days for the daily number and by average check for covers.
Contribution margin is the share of each sales dollar left after variable costs, which is the part available to pay fixed costs and then profit. If variable costs are 62 percent of sales, every dollar contributes 38 cents. The higher the contribution margin, the lower the break-even point.
Mostly variable, because it rises and falls with sales when the schedule is built to a forecast. A minimum crew on a dead night is effectively fixed. Most operators treat hourly labor as variable and salaried management as fixed, which is how this calculator works.
Treat the profit you want as another fixed cost. Add it to total fixed costs before dividing by contribution margin. The result is the sales level that delivers that profit, not just zero.
It depends entirely on fixed costs and contribution margin. A 90-seat full service restaurant with $43,000 of monthly fixed costs and a 42 percent contribution margin breaks even at about $102,000 a month, roughly $3,900 a day over 26 operating days. Change the margin by four points and break-even moves by more than $10,000 a month.
Four levers: raise contribution margin (lower food, beverage and hourly labor percents, or raise prices), lower fixed costs (renegotiate the lease, right-size salaried management), raise average check so the same break-even takes fewer covers, or add a daypart whose added contribution exceeds its added fixed cost.
Opening a new restaurant? Break-even is the number that sizes your working capital. The startup costs guide walks through the whole opening budget, and the Startup System holds the workbook.
Read the break-even guide Run your prime costRules of thumb only. Results are estimates and not financial advice.
