Fixed vs. variable cost
By Marji · Updated · Sources and editorial policy
Also called: fixed cost · variable cost · semi-variable
Fixed costs stay the same whether you serve 20 covers or 200 — rent, insurance, salaries. Variable costs move directly with volume — food, hourly labour on a well-staffed line, packaging. Several large restaurant costs, labour above all, are semi-variable, and treating them as one or the other produces bad forecasts.
| Cost | Behaviour | Note |
|---|---|---|
| Rent, insurance, licences | Fixed | Percentage-rent clauses make rent partly variable — check the lease |
| Salaried management | Fixed | Until volume forces another manager |
| Food and beverage | Variable | The cleanest variable cost there is |
| Hourly kitchen labour | Semi-variable | A minimum crew must be there at 20 covers or 200 |
| Hourly service labour | Semi-variable | Scales in section-sized steps, not smoothly |
| Utilities | Semi-variable | A large base load plus a volume component |
| Marketing | Discretionary | Fixed in practice because it's budgeted, variable by choice |
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
Break-even point
The sales volume at which total revenue exactly covers total cost — the number below which you are paying to open.
Labor cost percentage
Total labour cost divided by sales — the other half of prime cost, and the half that's usually larger.
Prime cost
Total cost of goods sold plus total labor cost — the two numbers that decide whether a restaurant survives.
Ghost kitchen
A delivery-only kitchen with no dining room — different cost structure, different margin math.