Break-even point

The break-even point is the sales volume at which revenue equals all costs, so there is no profit and no loss. It is fixed costs divided by the contribution margin per order.

Knowing it tells you how many orders/customers you need per day to cover rent and fixed salaries. Try the free break-even calculator.

How to calculate break-even

Break-even sales = monthly fixed costs ÷ contribution margin, where contribution margin = 1 − (variable costs ÷ sales). Illustrative example: with fixed costs of 10,000 and variable costs at 40% of sales, the margin is 60% and you need sales of 10,000 ÷ 0.6 ≈ 16,667 to break even.

How to use it

It tells you how many guests per day you need and lets you test the effect of raising a price or cutting rent before deciding. It is essential before opening a new branch.

• Separate fixed from variable costs carefully
• Recalculate when rent or salaries change
• Divide the figure by working days to get a daily target
• Use the free break-even calculator on our site