Break-even
3 key numbers: monthly minimum revenue, daily customer target and safety margin.
Fixed costs (monthly)
Variable costs and parameters
Understanding Break-even
Running a restaurant without knowing your revenue floor is a risky game.
What is break-even?
The break-even point is the minimum revenue at which a restaurant makes neither profit nor loss. Every month below this figure is a loss.
Formula
Fixed costs
÷ Contribution Margin %
= Break-even revenue (₼)
CM% = 100% - Variable cost%
Fixed vs variable costs
Fixed costs don't change even when sales do.
Fixed costs
Rent, salaries, insurance, loan payments, licenses. These are paid even when sales are zero.
Variable costs
Food, beverages, packaging, delivery. These grow as sales grow.
Contribution Margin
What remains after subtracting variable costs from sales goes toward covering fixed costs.
Safety margin
Shows how far current sales are above break-even. If below 20%, you are in the risk zone.
Margin levels
DK Agency Tip
Track break-even weekly, not just monthly. Problems usually start mid-month, not at month's end.
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Automatically track break-even revenue, daily customer targets and sales gaps in one dashboard.