Understanding your break-even point is essential for restaurant success. This KPI tells you how many covers you need to break even. Learn the formula and how to use it for better planning.
Break Even Point Formula
Break Even Point = Fixed Costs / Contribution Margin %
Contribution Margin % = (Average Check – Variable Costs) / Average Check
What This Means
If your break-even is 150 covers per day and you’re currently doing 120, you’re losing money. At 150, you break even. At 180, you’re profitable.
Steps to Calculate
1. Identify all fixed costs (rent, salaries, insurance)
2. Calculate variable costs per cover
3. Determine average check size
4. Calculate contribution margin
5. Divide fixed costs by contribution margin %
Using Break Even for Decisions
Use this metric to decide on menu pricing, staffing levels, and expansion decisions. Know your break-even before making major changes.