Work out the monthly revenue, and the covers per trading day, your venue needs just to cover its fixed costs — before a single dollar of profit.
Fixed costs
Revenue & variable cost
Results
Break-even analysis answers a specific, practical question: how many covers, on an average day, does this venue need just to cover its fixed costs? Everything above that number contributes to profit; everything below it means the business is funding its fixed costs from somewhere else — usually the owner's capital. This is especially useful during a restaurant turnaround or a new opening, where knowing the real break-even point (not a hoped-for one) should shape every other decision. For the variable cost % input, our restaurant KPIs guide explains how food cost and labour cost combine into prime cost, which is the figure to use here.
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Rent, insurance, licensing, loan or lease repayments, and any wages that don't flex with covers — typically salaried management and a base level of admin support. If a cost changes materially with how busy you are, it belongs in the variable cost % instead.
Your combined food cost % plus the portion of your labour cost that genuinely flexes with covers (casual floor and kitchen staff rostered to demand, not fixed management wages). This is not quite the same as your full prime cost, since prime cost usually includes some fixed labour too — if you're unsure, starting with your food cost % plus 15–20 points for variable labour is a reasonable estimate.
Because it turns an abstract profit target into a concrete daily number — covers per day — that a manager can actually watch and act on during service, rather than discovering the shortfall a month later in the P&L.