Break-Even
How do you calculate restaurant break-even sales?
Direct answer
Restaurant break-even sales equal fixed costs divided by contribution margin ratio. The result is the sales volume needed to cover fixed costs before the restaurant earns profit.
Key points
- Break-even sales show the weekly or monthly revenue floor.
- Contribution margin ratio is sales minus variable costs, divided by sales.
- Break-even should be translated into covers, orders, or average daily sales.
What to do next
- 1Separate fixed costs from variable costs.
- 2Calculate contribution margin ratio.
- 3Divide fixed costs by contribution margin ratio, then compare it with actual sales.