Restaurant Break-Even Analysis Explained: All You Need to Know

Running a successful restaurant requires excellent taste, an eye for curating a creative menu, and a knack for designing an inviting atmosphere.

Supplementally, you need business sense, which many new restaurateurs may not have right out of the gate. What matters most is the willingness to learn and create systems that can maximize profits while still producing high-quality menu items that will keep your customers coming back for more. After all, nearly 17 percent of restaurants fail in their first year, and a large contributor to that is being unable to earn more than they spend per meal.

Calculating your break-even point is a key figure in the operations of your restaurant, and refers to the amount of revenue required to cover the total fixed and variable expenses accrued during a particular time period.

Conducting a break-even analysis is a great way to get a handle on your inventory (and your menu), to make sure you’re spending on the right things, and not wasting money on the wrong ones.

In this article, you will learn:

• The definition of a break-even analysis
• The difference between fixed and variable costs
• How to calculate your break-even point