Find the sales and the number of covers you need each month to cover your costs.
Variable cost share = food % + variable labor % + other variable %.
Contribution margin = 1 − variable cost share.
Break-even sales = fixed costs ÷ contribution margin.
Covers = break-even sales ÷ average check.
A bistro has $38,000 fixed costs a month. Food and beverage cost is 30% of sales, variable labor 22% and other variable costs 6%, so 42% of each sale is left to cover fixed costs. Break-even sales are $90,476 a month, about $3,480 per day over 26 days, or 109 covers a day at a $32 average check.
Use it when you plan a new location, change menu prices or decide whether to open on an extra day.
Fixed costs stay the same whatever you sell, such as rent and salaried staff. Variable costs move with sales, such as food, beverage and hourly labor that you schedule to demand.
A taco truck has $9,500 a month in fixed costs for the truck loan, commissary, insurance and permits. Food and packaging run 33% of sales, hourly labor 18% and card fees plus fuel 9%, leaving a 40.0% contribution margin. Break-even sales are $23,750 a month, about $1,080 for each of 22 service days. At a $14 average ticket the truck needs 1,697 orders a month, about 78 a day.
Break-even is where sales exactly cover fixed and variable costs, so each dollar above it adds about the contribution margin percentage to profit. Covers are rounded up, and the per-day count is rounded up on its own, so it can be slightly higher than monthly covers divided by days. The result is wrong if labor you call variable is really a fixed minimum crew that is scheduled no matter how slow sales are.
Salaried managers are usually fixed. Hourly staff scheduled to demand behave more like variable costs.
Add commissions to other variable costs, since they rise with delivery sales.
Only if you include it in fixed costs. Many owners do.
Reduce fixed costs, improve food cost, or schedule labor closer to demand.
A price increase lowers food cost as a percentage of sales, which raises the contribution margin and lowers break-even sales. It also raises the average check, so fewer covers are needed. Enter the new food cost percentage and check rather than guessing both effects.
Variable, because processing fees rise with every sale. Add them to other variable costs as a percentage of sales, along with delivery app commissions and to-go packaging.
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