The short version
Divide your monthly fixed costs by (1 - variable cost percentage) to get break-even sales. For 2025, with $20,000 fixed and 60% variables, aim for $50,000 in monthly revenue to break even.
The real math: restaurant break-even formula
Skip the guesswork. Use this core formula with 2025 costs:
Break-even sales = Fixed costs ÷ (1 - Variable cost %)
- Fixed costs: $15,000–$30,000/month (rent $5,000–$10,000, utilities $1,500–$3,000, insurance $1,000–$2,000, salaries $5,000–$10,000).
- Variable costs: 55–65% of sales (prime costs: food 28–35%, labor 25–35%).
- Example: $25,000 fixed ÷ (1 - 0.60) = $62,500 break-even sales.
Factor prime costs (food + labor) as your biggest variable—aim under 60% total to keep break-even realistic.
Factors that shift your break-even point in 2025
Costs aren't static—adjust for these to keep your number accurate:
1. Fixed cost creep
- Rent hikes: +5–10% annually in urban spots.
- Utilities/inflation: +8–12% on energy and supplies.
- Minimum wage bumps: Add $2,000–$5,000 to base salaries.
2. Variable % swings
- Food inflation: Beef/poultry up 4–7%, pushing food cost to 32–38%.
- Labor efficiency: Overstaffing adds 5–10% to variables.
- Seasonal sales: Winter dips raise effective break-even by 15–20%.
3. Concept and size
- Small cafe (20 seats): $30,000–$40,000 break-even.
- Full-service (100 seats): $80,000–$120,000/month.
- Delivery-heavy: Add 10–15% variables for fees/packaging.
4. Hidden add-ons
- Card fees: 2–3% of sales as "variable."
- Waste/theft: +2–5% to food cost if unchecked.
- Marketing/debt: Treat as fixed if consistent ($1,000–$3,000/month).
Quick break-even audit
Run this check monthly in under 15 minutes:
Step 1: List fixed costs
- Tally rent, utilities, insurance, base payroll—use last 3 months' averages.
- Ignore variables like hourly labor or food purchases.
- Plug into our templates page for a simple tracking sheet.
Step 2: Calculate variable %
- Prime costs ÷ sales from last P&L (target under 60%).
- Adjust for trends: If food cost hit 35% last month, use that.
Step 3: Run and stress-test
- Formula gives base break-even.
- Add 10% buffer for slow weeks: $50,000 becomes $55,000 target.
- Track weekly with our Prime Cost Calculator from calculators.
How to lower your break-even without cutting quality
A high break-even stresses cash flow—trim it smart:
- Negotiate fixed. Shop insurance ($500–$1,000 savings/year) or sublet space.
- Optimize variables. Cut food waste to drop cost 2–4%; schedule labor to sales for 3–5% savings.
- Boost sales mix. Push high-margin items to lower effective variables by 5%.
- Monitor weekly. Use tools to catch creeps before they raise break-even $5,000–$10,000/month.
Grab the Break Even Calculator from our calculators page to automate the math.
Where the RPS tools plug in
One-time calc is easy. Tracking as costs shift? Our stack handles it:
- Prime Cost Calculator: Break down food + labor for accurate variable % in your formula.
- Labor Cost Cheat Sheet: Optimize scheduling to keep variables under 30%.
- Break Even Calculator: Plug in your numbers for instant scenarios and buffers.
- Live Menu Engine service: We link costs to pricing for auto-adjusted break-even targets.
If you’re comparing DIY spreadsheets and live menu pricing to the big all-in-one restaurant platforms, our Us vs Them page breaks down why Restaurant Profit Systems is different.
Simple next step for this week
Pull last month's P&L. Run the formula with your fixed ($20,000?) and variables (62%?). If break-even is over 80% of average sales, trim $2,000 in fixed or 3% in variables now.
FAQs
How do I calculate my restaurant's break-even point if fixed costs jumped to $25,000 this month?
Start by adding up all fixed costs like rent at $8,000, utilities at $2,500, and insurance at $1,200, then divide by your contribution margin (1 - 62% variable costs) to get $65,789 in required sales. Track this weekly to catch if rising utilities add another $500, pushing break-even up $1,316. Use our Break Even Calculator from the calculators page to run scenarios and set a $70,000 buffer for safety.
Why is my small restaurant's break-even sales over $40,000 when I only do $35,000 monthly?
High variables like 65% prime costs (35% food + 30% labor) mean your contribution margin is just 35%, so $15,000 fixed costs require $42,857 in sales to break even. Cut labor by 3% through better scheduling to drop variables to 62%, lowering break-even to $39,474. Grab the Labor Cost Cheat Sheet from templates to audit shifts and save $1,000–$2,000 monthly.
What should my break-even point be for a 50-seat restaurant with $20,000 fixed costs?
Aim for under $50,000 in break-even sales by keeping variables at 60% (food 30%, labor 30%), so $20,000 fixed ÷ 0.40 margin = $50,000 target. If sales average $45,000, trim fixed by negotiating rent down $1,000 to hit $47,500 break-even. Plug numbers into the Prime Cost Calculator on calculators to test adjustments and avoid $5,000 monthly shortfalls.
How can I lower my restaurant break-even point without raising menu prices?
Focus on variables: reduce food waste by 2% to save $800–$1,200 monthly, dropping overall variables from 63% to 61% and break-even from $54,054 to $51,282 on $20,000 fixed. Optimize labor with sales-based scheduling to cut 4 hours per shift, adding $500 in margin. Use the Menu Engine service to automate cost links and maintain a 38% contribution without manual tweaks.
If my restaurant prime costs are 58%, what's the break-even sales for $18,000 fixed expenses?
With 58% variables, your margin is 42%, so break-even is $18,000 ÷ 0.42 = $42,857 monthly sales. Monitor if food inflation pushes primes to 60%, raising break-even to $45,000—counter by updating portion controls to save 1–2%. Download the templates for a Prime Cost Tracking Sheet to log weekly and keep under $40,000 target.