Calculating Break-Even Point

The break-even point is an important figure in running a profitable restaurant. It represents the number of sales your business needs to make over a period of time to remain profitable. It is the point at which your restaurant will not lose any money.  To give you a better understanding of this concept, this article will explain:

  • What is the break-even point for a restaurant?
  • How to calculate the break-even point for a restaurant?
  • What is the difference between fixed and variable Costs?
  • What is break-even analysis?

What is the break-even point for a restaurant?

For most business owners, they tend to wonder when their business will break even. While this is a crucial metric in running a restaurant, some people tend to overlook it. However, it is important to conduct a break-even analysis to understand how profitable your business is. This will help you set the right prices for your products and aim at reaching optimal sales volume.

 

Total Revenue equals Total Cost

The break-even point is the point at which the revenue of your restaurant equals the costs. It represents the amount of revenue needed to cover the restaurant’s fixed and total variable costs over a specific time period. Once this figure has been calculated, you get to know the number of sales you need