Restaurant Break-Even Calculator

The break-even point is the revenue level where your restaurant covers all costs — both fixed (rent, insurance, salaries) and variable (food, hourly labor, supplies). Below this point you lose money; above it, every additional dollar of contribution margin is profit. The formula is: Break-Even Revenue = Fixed Costs ÷ (1 − Variable Cost %). For example, a restaurant with $25,000 in monthly fixed costs and 55% variable costs breaks even at $55,556/month. Every operator should know this number and recalculate whenever costs change.

Use the contribution margin method in three steps:

1. Total your fixed costs (rent, insurance, salaried staff, loan payments, licenses, etc.).
2. Calculate your variable cost percentage. Add food cost % + hourly labor % + credit card fees % + other variable costs. Most restaurants land at 45-65%.
3. Divide fixed costs by (1 − variable cost %). That is your break-even revenue.

Example: $30,000 fixed costs ÷ (1 − 0.55) = $30,000 ÷ 0.45 = $66,667/month. Divide by 26 operating days = $2,564/day. Divide by a $28 average check = 92 covers per day to break even. That gives your team a concrete daily target.

Fixed costs stay the same regardless of how many guests you serve:

• Rent or mortgage: typically $3,000-$15,000/month depending on market and size
• Property and liability insurance: $500-$2,000/month
• Salaried manager/chef pay: $4,000-$8,000/month per position
• Loan payments: varies by financing
• Equipment leases: $500-$2,000/month
• Licenses and permits: amortized monthly
• Base utility charges: fixed portion of electric, gas, water
• POS and software subscriptions: $200-$500/month
• Service contracts: HVAC, pest control, grease trap ($300-$800/month)

These typically total $15,000-$45,000/month for an independent restaurant. Use our opening cost calculator to estimate these before you sign a lease.

Variable costs scale directly with revenue:

Food and beverage purchases: 28-35% of revenue (check yours with our food cost calculator)
Hourly wages: Servers, cooks, dishwashers, bussers — typically 15-20% of revenue
Credit card processing: 2-4% of revenue
Delivery commissions: 15-30% per order (if applicable — this is why delivery can kill margins)
Disposable supplies: Takeout containers, napkins, bags — 1-3% of revenue
Cleaning products: Scales with volume

Total variable costs typically run 45-65% of revenue. The lower your variable cost percentage, the more of each revenue dollar goes toward covering fixed costs and generating profit. For a detailed breakdown of food cost specifically, see our guide on the food cost percentage formula.

Most new restaurants reach operating break-even within 6-18 months, though some take up to 2-3 years to fully recoup startup costs. These are two separate calculations:

Operating break-even: The monthly revenue needed to cover ongoing costs (what this calculator measures). Most restaurants hit this within 6-12 months as they build a customer base and optimize operations.

Startup break-even: Recovering the initial investment (build-out, equipment, pre-opening costs). On a $375,000 startup with 6% net margins and $80K/month revenue, full payback takes roughly 6-7 years. Use our opening cost calculator to estimate your total startup investment, then factor it into your long-term plan.

Contribution margin is the percentage of each revenue dollar left after variable costs. It is the money available to cover fixed costs and generate profit. Most restaurants target a 35-55% contribution margin ratio:

Quick-service: 45-55% (lower food cost, simpler operations)
Fast casual: 40-50%
Casual dining: 35-45%
Fine dining: 30-40% (higher food and labor costs per cover)

Higher is better — it means you keep more of each dollar. A restaurant with a 45% contribution margin and $30,000 in fixed costs breaks even at $66,667/month. The same restaurant with a 35% contribution margin needs $85,714/month — nearly $20K more revenue to reach the same point.

Two levers: reduce fixed costs or reduce variable cost percentage. The highest-impact moves:

Negotiate rent at renewal. A $500/month rent reduction drops your break-even by $1,000-$1,500/month in revenue depending on your margins. Landlords would rather discount than find a new tenant.
Cut food cost by standardizing portions. Over-portioning proteins by 1 oz adds 2-3 percentage points to food cost across the menu. Use portion scales and standardized recipes. See our food cost control guide.
Optimize labor scheduling. Schedule to demand using historical sales data. Overstaffing during slow dayparts is the most common labor waste. Check your numbers with our labor cost calculator.
Raise average check size. Training servers to upsell a $3 appetizer or dessert on 30% of checks can increase average check by $1-$2 — meaning fewer covers needed to break even with the traffic you already have.

The formula is the same, but the inputs differ significantly:

New restaurant: You are estimating costs before you have real data. Use industry benchmarks (food cost 30-32%, hourly labor 17-20%, etc.) and be conservative — overestimate costs, underestimate revenue. Your break-even target is the minimum daily revenue your concept must generate to be viable. If the number requires more covers than your seating capacity can physically handle, rethink the concept or the location.

Existing restaurant: You have real numbers. Pull actual fixed costs from your P&L, calculate actual variable cost percentage from the last 3 months, and use your real average check size. Recalculate quarterly or whenever a major cost changes (new lease terms, wage increases, menu price changes). Compare your actual revenue against break-even to know your profit margin safety cushion.