The Restaurant Break-Even Guide

By Rob Bruni, founder of OpsEdge Hospitality, twenty years running restaurants, bars, clubs and resorts. Updated November 2026.

Break-even is the sales level where a restaurant stops losing money and starts making it. Every dollar below it costs you something, every dollar above it drops partly to the bottom line. Most operators have a feel for it and almost none have the number. This guide covers how to separate fixed and variable costs, the formula, a worked example in dollars and in covers, and what the number is good for once you have it.

What break-even means for a restaurant

A restaurant has costs that show up whether or not anyone walks in (rent, insurance, salaried managers, loan payments) and costs that show up only when a guest orders (the food on the plate, the hourly labor to make and serve it). Break-even is the point where the sales from guests cover both kinds of cost exactly. Profit is zero. One more guest and you are profitable. One fewer and you are not.

It matters because it turns a vague worry ("are we doing okay this month?") into a daily target. If break-even is $3,400 a day and Tuesday did $2,900, you know what Tuesday cost you. If Saturday did $6,800, you know roughly what it made. Managers who know the number make different decisions about hours, comps and promotions than managers who do not.

Fixed costs, variable costs and contribution margin

Fixed costs

Costs that do not change with sales in the short run. Rent or mortgage, property tax, insurance, salaried management, loan payments, equipment leases, base utilities, software subscriptions, accounting, licenses. Add them up for a month. Most independents land between $25,000 and $90,000 a month depending on size and market.

Variable costs

Costs that rise and fall with every sale. Food and beverage cost, hourly labor including its payroll taxes, credit card processing, paper and packaging, delivery platform fees. Express these as a percent of sales. For a full service restaurant, food and beverage together usually run 28 to 34 percent, hourly labor and taxes 20 to 26 percent, cards and supplies 3 to 5 percent. Together that is 55 to 65 percent of sales.

Some costs are a mix. Utilities have a base and a usage part. Hourly labor has a minimum crew you need even on a dead night. Put the base in fixed and the rest in variable. Perfect is not the goal; consistent is.

Contribution margin

Contribution margin is what is left of each sales dollar after variable costs, which is the part available to pay fixed costs. If variable costs are 62 percent of sales, every dollar contributes 38 cents toward rent, salaries and profit.

The break-even formula

That is the whole thing. Monthly fixed costs divided by the share of each dollar left after variable costs gives the monthly sales you need to land at zero profit. Divide by operating days for the daily number. Divide by average check for covers.

Two variations worth knowing:

• Break-even with a profit target. Add the profit you want to fixed costs before dividing. If you want $8,000 a month, treat it like another fixed cost.
• Break-even on prime cost. If you track prime cost weekly, your variable cost percent is roughly prime cost minus the salaried share of labor, plus cards and supplies. This lets you update break-even every Monday from numbers you already have.

A worked example

Now add a target. The owner wants $10,000 a month in profit. ($43,000 + $10,000) ÷ 0.42 = $126,200 a month, or $4,850 a day, or 115 covers. The gap between 94 and 115 covers a day is the whole business plan.

Notice how sensitive this is to contribution margin. If variable costs creep from 58 to 62 percent (a couple of points of food cost and a couple of labor), break-even rises from $102,400 to $113,200. Four points of cost control moved break-even by almost $11,000 a month with nothing else changing. That is why the cost guides on this site matter: every point of prime cost you hold is a lower hill to climb every single month.

Break-even in covers, days and dollars per day

The monthly number is for the owner and the accountant. Managers need it in a form they can use at 4 p.m. on a Tuesday.

Form	How to get it	What it is for
Dollars per day	Monthly break-even ÷ operating days	The daily sales target on the manager log
Covers per day	Daily break-even ÷ average check	Reservation and floor planning, server sections
Dollars per hour	Daily break-even ÷ operating hours, weighted by daypart	Deciding whether a daypart is worth opening
Days to break even	Monthly break-even ÷ average daily sales	How many days of the month work for the landlord, how many for you

The last one is the one owners remember. If break-even is $102,400 and average daily sales are $4,600, the first 22 days of a 26-day month pay the bills and the last four are profit. Lose two weekend nights to weather and the month is gone.

Five decisions break-even makes easier

1. Whether to open a daypart. Lunch adds hourly labor, utilities and some fixed cost. Work out the break-even for lunch alone (its added fixed cost ÷ its contribution margin). If you cannot see those covers, do not open.
2. Whether a promotion pays. A 20 percent discount on a 42 percent margin item cuts the contribution to 22 percent. You need almost twice the covers just to stay even. Most "half price" nights lose money and the owner never knows.
3. How many covers a server section must do. Covers per day ÷ servers on the floor gives the minimum each section has to produce, which tells you if the floor plan is too thin or too fat.
4. Whether a rent increase is survivable. Every $1,000 of added fixed cost at a 42 percent margin needs $2,380 more in monthly sales. Put the landlord's number through the formula before you sign.
5. What a point of food cost is worth. One point of variable cost on $130,000 in monthly sales is $1,300 a month and about $3,100 a month in lower break-even. That is the argument for the weekly inventory count.

How to lower your break-even point

There are only two levers, and the second one is the one most operators ignore.

Lower fixed costs

• Renegotiate the lease at renewal with your break-even math in hand. Landlords respond to numbers.
• Review every subscription and service contract once a year. Most restaurants carry $300 to $800 a month in software and services nobody uses.
• Match management salaries to volume. A $120,000 salaried layer on a $1.2 million restaurant is 10 points of fixed cost on its own.
• Refinance equipment and loans when rates allow.

Raise contribution margin

• Hold food and beverage cost with weekly counts, current recipe costs and menu engineering. Two points here is worth more than most lease negotiations.
• Schedule hourly labor to a sales forecast, not to habit.
• Raise average check through the menu mix, not just prices: one high-margin item in a prime position, one add-on the servers mention.
• Audit card processing and delivery fees. Rates drift up and nobody calls.

Rebuild the number every quarter. Fixed costs change on renewal dates, variable costs change with every price move, and a break-even that is a year old is a guess. The Restaurant P&L and Prime Cost Dashboard in our catalog has the break-even sheet built in, and the P&L guide covers how the fixed and variable lines fit together on the statement.

Related guides and tools

FAQ

What is the break-even point for a restaurant?

Break-even is the sales level at which total sales equal total costs, so profit is zero. It is worked out as monthly fixed costs divided by contribution margin percent (100 percent minus variable cost percent), and is usually expressed per month, per day and in covers.

How do I calculate restaurant break-even?

Add up monthly fixed costs (rent, salaries, insurance, loans, base utilities). Work out variable costs as a percent of sales (food, beverage, hourly labor, cards, supplies). Contribution margin is 100 minus that percent. Break-even sales equals fixed costs divided by contribution margin. Divide by operating days for the daily target and by average check for covers.

What is a typical restaurant break-even?

It depends entirely on fixed costs and margin, but a 90-seat full service independent with $43,000 of monthly fixed costs and a 42 percent contribution margin breaks even around $102,000 a month, roughly $3,900 a day or 94 covers a day at a $42 check.

Is hourly labor a fixed or variable cost?

Mostly variable, because hours should move with sales. Treat the minimum crew you need on the slowest shift as fixed and everything above it as variable. Salaried management is fixed.

How often should I recalculate break-even?

Quarterly, and whenever a fixed cost changes (a lease renewal, a new manager, a loan) or variable costs move more than a point. A break-even number that is a year old is not reliable.

How do I lower my break-even point?

Two levers: lower fixed costs (lease, salaries, subscriptions, debt) or raise contribution margin (food and beverage cost, hourly labor scheduled to forecast, average check, card and delivery fees). Margin is usually the faster and larger lever.