Restaurant Break Even Calculator

How to Use Our Free Restaurant Break-Even Point Calculator

Our restaurant break-even calculator is designed to help you quickly figure out when your restaurant will start making a profit. Here’s a simple guide to get you started:

1. Start with Your Fixed Costs
   • If you already know your total monthly expenses, toggle the “I know my monthly expenses” switch to on and enter the total in the “Monthly Expenses” field.
   • If you’d like to enter individual fixed costs, leave the toggle off and fill in the fields for rent, insurance, property tax, salaries, and other fixed costs.
2. Enter Your Variable Costs
   • In this section, you’ll input percentages of your sales that go toward costs like food, hourly labor, and other variable expenses. These costs typically change based on how much you sell.
3. Average Spend per Guest
   • Enter the average amount each guest spends at your restaurant. This will help calculate how many customers you need to cover all your costs.
4. Click Calculate
   • Once all fields are filled in, hit the Calculate Break-Even Point button. The calculator will do the math and show you the number of guests you need each day to break even.
5. Review Your Results
   • You’ll see results like how many guests you need to break even over 30 days and how much profit you can expect at different sales levels. This will help you plan your restaurant’s financial goals.
6. Explore the Graph
   • For a visual breakdown, check out the graph at the bottom. It shows your break-even point and how your costs and revenue change with guest numbers.
7. Clear or Adjust
   • If you need to start over, use the Clear Form button to reset all fields. You can also go back and adjust your numbers to see different scenarios.

That’s it! With just a few steps, our calculator helps you understand what it takes to make your restaurant profitable.

How to Calculate a Restaurant Break-Even Point

Running a restaurant is a balancing act between offering great food and managing your finances. One of the most important numbers to know is your break-even point (BEP)—the point where your restaurant’s revenue covers its costs. After you hit this point, every dollar you earn is profit.

In this guide, we’ll break down the process of calculating the break-even point for a restaurant in simple steps. You don’t need to be a finance expert to figure it out!

What Is the Break-Even Point?

The break-even point is the moment when your restaurant’s sales cover all of its expenses. It means you’re no longer losing money, but you’re not yet making a profit either. Knowing this number helps you understand how much money you need to bring in just to keep things running smoothly.

Why Is the Break-Even Point Important?

Calculating your break-even point gives you a clear picture of your restaurant’s financial health. It helps you:

• Set revenue goals: You know exactly how much you need to make to stay afloat.
• Plan pricing strategies: If you need to raise prices or offer specials, this number gives you a starting point.
• Control costs: It’s easier to manage expenses when you know what’s cutting into your profits.

Key Terms You Need to Know

Before we dive into the calculation, let’s cover a few basic terms:

1. Fixed Costs: These are the expenses that stay the same no matter how much you sell. Common fixed costs include rent, insurance, and salaries.
2. Variable Costs: These change depending on how much you sell. In a restaurant, this includes the cost of ingredients, supplies, and utilities.
3. Total Revenue: The money your restaurant makes from sales.
4. Contribution Margin: The amount of money left over after subtracting variable costs from your sales. This helps cover fixed costs and, eventually, profit.

The Break-Even Formula

To calculate your restaurant’s break-even point, you’ll use this simple formula:

Let’s break it down:

1. Fixed Costs are things like rent, utilities, and employee salaries.
2. Contribution Margin per Unit is how much money you make from each sale after covering variable costs. You can calculate this by subtracting the variable cost per dish from its price.

Step-by-Step Guide to Calculating the Break-Even Point

Here’s how you can calculate your restaurant’s break-even point:

1. Add Up Your Fixed Costs

Start by adding up all your fixed costs. These are the costs that don’t change, whether you sell one meal or a hundred. Examples include rent, monthly salaries, and insurance.

2. Calculate Your Variable Costs

Next, figure out your variable costs. These are the costs that change depending on how much food you sell. It includes the cost of ingredients, beverages, and packaging.

3. Find Your Contribution Margin

Now, subtract the variable cost per dish from the price of that dish. The leftover amount is your contribution margin. This is the amount that contributes to covering your fixed costs.

Example:
Let’s say your most popular dish costs $20 and your variable costs (ingredients and supplies) are $8 per dish. Your contribution margin would be $12.

4. Use the Break-Even Formula

Once you know your fixed costs and contribution margin, you can calculate your break-even point.

Example:
Let’s assume your fixed costs (rent, salaries, etc.) are $10,000 per month. Using the contribution margin from the example above, here’s how you’d calculate your break-even point:

This means you need to sell 834 dishes in a month to break even.

What to Do After Calculating Your Break-Even Point

Once you’ve figured out your break-even point, you can make smarter decisions about your restaurant’s finances:

• Set sales targets based on how many dishes or how much revenue you need each day or week.
• Adjust your menu prices if needed to increase your contribution margin.
• Cut costs where possible, especially if you find that your fixed or variable costs are too high.

Knowing your restaurant’s break-even point is crucial to staying profitable. It gives you a clear idea of how much revenue you need to cover your costs and helps you make informed decisions about pricing, costs, and sales goals. By following these simple steps, you’ll have a solid understanding of your restaurant’s financial foundation, allowing you to focus more on creating great experiences for your customers.

Stay on top of your numbers, and your restaurant is sure to thrive!