Your break-even is the week’s sales that pays every bill and leaves nothing over. Below it, you are paying to open the doors.
We think it works best as two numbers: sales a week, which you watch, and covers a day, which your floor manager can count during service.
Split every cost into fixed or variable
Fixed costs stay the same whether you do 200 covers or 600: rent and outgoings (the base rent on a turnover lease), insurance, software, salaried staff, power and gas, bookkeeping, repairs and loan interest. If you work in the venue, put a wage for your role in here too, or break-even will look lower than it is.
Variable costs move with trade: food and drink, casual wages, card fees, delivery commissions, packaging, and the turnover part of a turnover lease.
Put super on every wage line, fixed and variable. The super guarantee is 12% of qualifying earnings for 1 July 2026 to 30 June 2027, and you now pay it for each payday. So $1,000 of casual wages on ordinary hours costs $1,120. Our piece on payday super covers the timing.
Do the whole sum without GST. If you’re registered, the GST you collect is put aside for the ATO and you claim back the GST in your business purchases. There is no GST on wages, and basic foods bought GST-free have none to take out. If you can’t claim a credit on a purchase, for example because you aren’t registered, count its full price.
For this 60-seat restaurant, break-even is $20,000 a week
Take a 60-seat restaurant open Wednesday to Sunday. Its variable costs, as a share of sales without GST:
- Food and drink: 30%
- Casual wages: 25%
- Super on those wages: 3%
- Delivery commissions: 3%
- Packaging: 2.5%
- Card fees: 1.5%
That’s 65%, so 35 cents of every sales dollar is left to pay the fixed costs. That 35% is the contribution margin. The restaurant’s fixed costs a week:
- Rent and outgoings: $2,500
- Head chef and manager on salary: $2,500
- Super on salaries: $300
- Power, gas and water: $600
- Insurance: $200
- Software: $200
- Bookkeeping, repairs and the rest: $700
That’s $7,000. Divide by the margin: $7,000 ÷ 0.35 = $20,000 a week without GST. If every sale is taxable, that’s about $22,000 on the POS.
At $50 a head, $20,000 is 400 covers a week, or 80 a day across five days, which fills the 60 seats about 1.3 times a day. A manager who knows the room needs 80 tonight can tell by 8pm how the day is going. Days aren’t equal, so weight it: if Friday and Saturday bring in half a normal week, they need $10,000 between them.
Then look at how far an ordinary week clears the line. On a $24,000 week:
- Sales: $24,000
- Variable costs at 65%: $15,600
- Fixed costs: $7,000
- Profit before tax: $1,400
That week sits $4,000 above break-even. A week a sixth short of normal wipes the profit out.
A quiet day has to pay for its own crew
The weekly fixed costs get paid whether Wednesday is open or not, so leave them out when you judge a day. The question is whether the day’s sales cover the costs that only exist because the doors are open.
On a quiet day you can’t roster below the crew it takes to run a kitchen and a floor, so that crew is the day’s fixed cost.
- Minimum crew with super: $1,160
- Extra power and gas: $100
- Cost of opening: $1,260
- Variable costs without wages and super: 37%, so the margin is 63%
- Break-even for the day: $1,260 ÷ 0.63 = $2,000, or 40 covers at $50
If Wednesdays do 30 covers, $1,500 of sales contributes $945 against $1,260 of cost, a $315 loss each week. Weigh that against the regulars you’d lose and the shifts your best casuals count on before you change the hours.
A second site needs its own sum
Work out the new site’s break-even from its own fixed costs. If its rent, salaries, fit-out loan interest and other fixed costs come to $8,750 a week, at the same 35% margin it needs $25,000 a week before it earns anything.
At $50 a head that’s 500 covers a week. A 40-seat room open five days would have to seat 100 people a day, two and a half turns. If your first venue doesn’t do that, the forecast needs another look before you sign the lease. Until the new site gets there, the shortfall comes from your first venue’s cash or from borrowing.
Supplier prices move the line every week
A rent review or a new salary moves break-even overnight. Supplier prices move it a little at a time. If food cost goes from 30% to 33%, the margin falls to 32% and break-even climbs from $20,000 to $21,875 a week.
We see supplier price rises turn up on the invoice with no warning, which is why we flag them the week they happen. Work your contribution margin out from last week’s food cost and wages on a weekly P&L, so the number you divide by is never more than a week old.
What we would do
- Take the last eight to twelve weeks of your P&L, all without GST
- Mark each cost fixed or variable, with super on every wage line
- Divide fixed costs by the contribution margin
- Divide that by your average spend and give the floor the daily cover number
- Redo it after a rent review, a new salary or a supplier price rise
If we do your restaurant’s books, bring this sum to your monthly call with Amit.