Finance & Metrics
Break-Even Point
Definition: The sales level at which total revenue equals total fixed and variable costs, yielding zero operating profit.
Break-even analysis answers how many dollars or covers you must sell monthly to cover rent, debt service, management salary, utilities, and variable food and labor. The formula uses contribution margin: sales minus variable costs as a percent of sales.
Restaurant investors and landlords increasingly ask for break-even cover counts, not only rent as a percent of sales. A site that breaks even only if you outperform every competitor on the block is a red flag.
Update break-even after menu price changes, labor law shifts, or new delivery channel fees. Opening budgets should include three months of working capital beyond break-even month one.
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