Restaurant Break-Even Calculator

The Break-Even Formula

The basic formula divides your total fixed costs by your contribution margin ratio (the percentage of each dollar that remains after variable costs like food and hourly labor).

Fixed costs are expenses that do not change with sales volume: rent, insurance, salaried management, loan payments, equipment leases, base utilities, and software subscriptions. For a typical full-service restaurant, these might total $28,000 per month.

Variable costs scale with revenue: food costs (typically 28 to 32 percent of revenue), hourly labor (roughly 20 to 25 percent when proportional), credit card processing (about 2.5 to 3 percent), paper goods, and cleaning supplies. If your total variable costs equal 58 percent of revenue, your contribution margin ratio is 42 percent, or 0.42.

Break-Even in Covers (Customers)

Revenue targets are useful, but covers are more actionable for day-to-day operations. To convert break-even revenue into covers, divide by your average check.

If your break-even revenue is $66,667/month and your average check is $38, you need 1,754 covers per month, or about 58 covers per day (assuming 30 operating days). If you are open for dinner only with 60 seats, that means you need to turn roughly 97 percent of your seats once per night just to break even.

This kind of math exposes whether a concept is viable before you lose money learning the hard way. If break-even requires 95+ percent seat utilization every single night, the model is too tight. You either need to raise your average check (through better menu pricing), reduce fixed costs, improve your contribution margin by lowering food cost percentages, or add a revenue stream like lunch or catering.

Daily Break-Even: The Number Your Team Should Know

Monthly break-even is useful for planning. Daily break-even is useful for action. Divide your monthly break-even by operating days to get a daily target. For the example above: $66,667 ÷ 30 = $2,222 per day.

Post this number where your managers can see it. When the POS shows $1,800 at 7 PM on a Tuesday, everyone knows you are $422 short and the last two hours of service matter. When the POS hits $2,222 by 6 PM on a Friday, everything from that point forward is profit.

This simple visibility drives better decisions about upselling, turning tables, and when to call in extra staff versus when to cut a server early.

How Food Cost Affects Break-Even

Your food cost percentage is the largest variable cost in the formula. Reducing it directly lowers your break-even point. Consider the impact:

Reducing food cost from 34% to 26% — an 8-point improvement — lowers your monthly break-even by nearly $13,000. That is the difference between needing 64 covers a day and needing 53. Our guide to reducing food cost has 10 specific methods to bring that number down. You can also read the complete food cost guide for the full picture.