The formula
Every sale has two parts: the variable cost of producing it (food, the hourly labor to cook and serve it, the card fee) and what's left, the contribution margin. Fixed costs are paid out of contribution margin, so:
Break-even sales = fixed costs ÷ contribution margin ratio, where the ratio = 1 − (variable costs ÷ sales). If fixed costs are $27,000 a month and variable costs are 58% of sales, the ratio is 0.42 and break-even is $27,000 ÷ 0.42 = $64,286 a month. In guests: fixed costs ÷ (average check − variable cost per guest). At a $24 check with $13.92 of variable cost, each guest contributes $10.08 and you need 2,679 guests a month, or 103 a day over 26 days.
To find the sales needed for a target profit, add the profit to fixed costs before dividing: ($27,000 + $6,000) ÷ 0.42 = $78,571.
Fixed vs variable, honestly
The clean split (rent fixed, food variable) breaks down on labor and utilities. The practical rules:
- Salaried management and a skeleton crew are fixed; you pay them on a dead Tuesday.
- Hourly staff above the skeleton is variable; enter it as a percentage of sales (NRA 2024 medians for total labor were 36.5% full service and 31.7% limited service, so if salaried is 10% of sales, hourly might be 22–27%).
- Utilities have a base (fixed) and a usage part; putting all of it in fixed is the conservative choice.
- Delivery commissions and card fees are pure variable, and at 15–30% for third-party delivery they change break-even a lot for a delivery-heavy concept. Enter a blended figure.
- Your own draw should be in fixed costs. A break-even that doesn't pay you isn't a break-even.
Margin of safety
If current sales are $80,000 and break-even is $64,286, the margin of safety is $15,714, or 19.6% of sales: you could lose a fifth of your revenue before losing money. The average full-service restaurant nets 3–5% (Toast, 2026), which implies most run with a margin of safety in the single digits, one soft month from a loss. The calculator prints yours if you enter current sales, and shows what each lever (rent, check average, food cost) does to it.
Moving the break-even
Three levers, in the order they usually pay off:
- Raise contribution per guest. A $1 increase in the average check on a $24 ticket with 58% variable cost adds 42¢ of margin per guest and cuts the number of guests you need by about 4%. Menu engineering and suggestive selling live here.
- Cut variable cost per sale. Each point of food cost is a point of contribution ratio. From 34% to 32% on $27,000 of fixed costs drops break-even by about $3,000 a month.
- Cut fixed costs. Rent renegotiation, insurance rebids, software audits. Slow, but every dollar comes straight off the break-even.
Check food + labor together with the prime cost calculator →
Frequently asked questions
How do I calculate break-even?
Fixed costs ÷ (1 − variable cost %). In guests: fixed ÷ (average check − variable cost per guest).
What's a fixed cost?
Rent, salaried staff, insurance, loans, base utilities, subscriptions. Anything you pay on a day with no guests.
Is labor fixed or variable?
Salaried fixed, hourly variable, is the working split.
What's a good margin of safety?
15–20%+ lets you absorb a bad month; under 10% is exposed. The 3–5% industry net margin implies most are thin.
How do I include a profit target?
Add it to fixed costs before dividing; the calculator does this if you enter one.
Should I include my own pay?
Yes, in fixed costs, or the break-even isn't real.