Break-even point
By Marji · Updated · Sources and editorial policy
Also called: break even · breakeven
Break-even is the sales level where contribution exactly covers fixed costs. Divide monthly fixed costs by your contribution margin ratio and you get the sales you need; divide that by average check and you get the covers.
Break-even sales
Fixed costs ÷ Contribution margin ratio
Contribution margin ratio = (Sales − Variable costs) ÷ Sales.
Worked example · A single-unit full-service restaurant
- Monthly fixed costs (rent, insurance, salaried labour, minimum hourly crew, utilities base)
- $34,000
- Variable cost ratio (food + hourly labour above the minimum crew + variable overhead)
- 62%
- Contribution margin ratio
- 38%
- Break-even sales per month
- $89,474
- Average check
- $38
- Break-even covers per month
- 2,355
- Open days per month
- 26
- Break-even covers per day
- 91
Why the daily number is the useful one
"$89,474 a month" is not a number anyone can act on during service. "91 covers before we make a dollar" is — it's checkable at 9pm, it's meaningful to a manager, and it makes the cost of a slow Tuesday concrete.
| Lever | Change | New break-even covers/day |
|---|---|---|
| Baseline | — | 91 |
| Raise average check | $38 → $41 | 84 |
| Cut variable cost ratio | 62% → 59% | 84 |
| Cut fixed costs | $34,000 → $31,000 | 83 |
| All three | combined | 71 |
Run the numbers
Break-even calculator
The guide that works it through
Restaurant Break-Even Analysis: Covers per Day, the Fixed Part of Labor and the Delivery Mix
Sort a month's costs into fixed and variable, find break-even sales and covers per day, and correct for what simple break-even math misses: the minimum crew, delivery commission and loan principal.
Related terms
Fixed vs. variable cost
Fixed costs don't move with sales; variable costs do. Most restaurant labour is neither, and that's where planning goes wrong.
Contribution margin
The dollars a dish contributes to overhead and profit after its ingredient cost — menu price minus plate cost.
Prime cost
Total cost of goods sold plus total labor cost — the two numbers that decide whether a restaurant survives.
Covers
The number of guests served in a period — the denominator behind average check, labour per cover and cost per cover.