Restaurant Break Even Analysis 2026: Turn Your Sales into Profit

Many restaurant owners know they need to cover their costs, but working out exactly how much they need to make each day to reach break-even and start generating a profit is where things can become less clear.

Your restaurant break-even point depends on the relationship between fixed costs, variable costs, sales and contribution margin. Understanding these figures can help you work out the revenue your restaurant needs to generate each month, as well as the daily sales and covers required to keep the business financially sustainable.

In this guide, we explain how restaurant break-even analysis works, how to calculate your daily sales target and the factors that can affect your break-even point throughout the year.

Why does restaurant break-even analysis matter?

Restaurant break-even analysis shows how much your restaurant needs to sell before it covers its operating costs and begins generating an operating profit. Until that point, the business may be trading actively but still losing money once its full cost base is taken into account.

This is why turnover alone does not tell you whether a restaurant is financially healthy. A restaurant can have busy services and strong monthly sales while retaining very little after paying for:

• Ingredients and beverages
• Kitchen and front-of-house wages
• Rent and business rates
• Utilities
• Insurance and licences
• Card processing and delivery fees
• Repairs, cleaning and other operating expenses

Restaurant profit margins can be quite small, so even a small rise in costs can affect how much money is left. Tenzo’s 2026 restaurant analysis suggests that many UK full-service restaurants make around £3 to £6 profit for every £100 of sales, although this can change based on the type of restaurant, location, prices and costs.

This gives restaurants less room to deal with rising costs. Office for National Statistics data showed that restaurant and hotel prices were 4% higher in July 2026 than a year earlier, and almost 2 in 3 hospitality businesses surveyed expected to cut jobs after April’s cost increases. For restaurants working with small margins, knowing your break-even point can help you keep costs under control and protect your profits.

Knowing your break-even point gives you a practical reference when making decisions about:

• Menu pricing and average spend per head
• Staffing levels and rota planning
• Opening hours and trading days
• Supplier negotiations and portion control
• Investment in equipment or refurbishment
• Whether additional sales are likely to improve profit

It also helps you understand whether sales growth is genuinely strengthening the restaurant or simply creating more work and additional costs without leaving enough contribution behind.

How do fixed and variable costs shape your break-even point?

Knowing your restaurant’s break-even point starts with understanding where your money goes, because some costs stay much the same each month while others increase as you serve more customers.

Splitting these costs correctly gives you a clearer picture of how much of your sales goes towards covering costs and how much can eventually become profit.

Fixed costs: Costs that stay the same

Fixed costs are the expenses you generally need to pay whether your restaurant is busy or quiet, with rent and business rates often making up a large part of these costs, followed by permanent staff salaries, insurance, licences and equipment leases.

Because these costs continue whether you serve 20 covers or 200, your restaurant needs to generate enough revenue to cover them before it can start making a profit.

Variable costs: Costs that change with sales

Variable costs change as your sales and customer numbers change, with food and drinks being the main examples, along with extra staff needed for busy shifts, packaging and delivery platform fees if you offer takeaway or delivery services.

The share of each pound of sales that goes towards these costs affects your contribution margin, which is an important part of working out your break-even point.

Typical restaurant cost ranges

As a general guide, here are some of the main costs a small to mid-sized UK restaurant may need to account for:

Once you have a clear view of these costs, you can use them to work out your break-even point and turn it into a practical daily sales target.

How to calculate a restaurant’s break-even point?

For a restaurant selling many different dishes at different prices, calculating break-even revenue through your contribution margin is usually more practical than trying to calculate a separate break-even quantity for every menu item.

The formula is:

Break-even revenue = Fixed costs ÷ Contribution margin ratio

Your contribution margin is the amount of sales revenue left after variable costs have been deducted. This remaining amount is available to cover fixed costs and eventually create profit. For a more detailed explanation of how this figure works, see our guide to contribution margin.

The contribution margin ratio can be calculated as:

Contribution margin ratio = (Revenue − Variable costs) ÷ Revenue

For example, imagine your restaurant has monthly fixed costs of £30,000 and variable costs account for 40% of net sales. This means your contribution margin ratio is 60%.

Your break-even calculation would be:

£30,000 ÷ 60% = £50,000

Your restaurant therefore needs approximately £50,000 of net monthly sales to reach its break-even point under these assumptions.

If sales reach only £45,000, the restaurant is likely to remain below break-even. If sales reach £55,000 while your cost structure stays the same, the additional contribution above the £50,000 threshold begins supporting your operating profit.

Your contribution margin can make a significant difference to this calculation:

This shows why increasing turnover is not the only way to reach profitability. Better portion control, reduced food waste, improved menu mix and more efficient labour planning can strengthen your contribution margin and lower the amount you need to sell.

 

How much does your restaurant need to make each day?

Once you know your monthly break-even figure, the next step is to turn that number into a daily sales target that is easier to use when you are managing your restaurant and planning each day’s trading.

Using the £50,000 monthly break-even figure from the example above, assume your restaurant trades for 26 days during the month. You can work out your daily break-even sales by dividing the monthly figure by the number of days you are open:

Daily break-even sales = £50,000 ÷ 26 = approximately £1,923

If your average customer spend is £32 excluding VAT where appropriate, you can then work out roughly how many covers you need each day to reach that sales target:

£1,923 ÷ £32 = approximately 61 covers per day

This means your restaurant would need to generate around £1,923 in daily net sales, or serve approximately 61 customers at an average spend of £32, to meet the assumed break-even target.

The number can change quite significantly depending on how your restaurant operates, particularly when you consider factors that influence the daily sales target.

What can affect your daily target?

Several factors can change the amount you need to make each day:

• Location and trading days: Higher property costs increase your break-even point, while fewer opening days mean you need to generate more sales on the days you trade.
• Pricing and menu mix: A higher average spend means fewer covers are needed, while promoting higher-margin dishes and drinks can improve your contribution.
• Labour: Extra staff during busy periods can increase costs, so staffing should match expected customer demand without affecting service quality.
• Seasonality and sales mix: Sales can vary between quiet and busy periods, while delivery orders may contribute less after commissions than dine-in sales.

Reviewing these factors alongside your break-even figure gives you a more realistic daily sales target and helps you see where changes could improve profitability.

Restaurant break-even analysis in practice

A useful real-world UK example is SUSHISAMBA Covent Garden in London, which Companies House records as an active business operating as a licensed restaurant. Its current Companies House record shows that the latest accounts cover the year ending 31 December 2025.

Publicly reported trading figures from an earlier accounting period show why restaurant owners should look beyond turnover alone. Restaurant Online reported that sales at SUSHISAMBA Covent Garden increased from £9.6 million to £10.2 million in 2023, while the wider SUSHISAMBA Group generated turnover of £15.2 million and profit after tax of £384,000.

The available figures are not enough to work out the Covent Garden restaurant’s exact break-even point because its full cost breakdown is not publicly available. However, they show why you need to look at sales alongside food, labour and other operating costs to understand how much profit a restaurant actually keeps.

The same applies to a smaller restaurant making £50,000 a month. That may sound like strong sales, but the real picture only becomes clear when you compare them with the restaurant’s break-even point.

Bringing your restaurant break-even numbers together

Your restaurant break-even analysis shows how much you need to make each month and each day to cover your costs. Converting this into daily sales and customer numbers makes it easier to plan staff, review prices and manage each service.

Your break-even point can change as wages, food prices, rent and other costs increase. Reviewing it regularly helps you spot rising costs and protect your profit. At Rise Accounting, our specialist hospitality accountants can help you calculate your break-even point, understand your margins and manage your restaurant finances.

Talk to our hospitality accounting experts to understand how much your restaurant needs to make each day.

Frequently asked questions

Should I calculate my restaurant break-even sales before or after VAT?

If you are VAT registered, you would normally calculate your break-even sales using figures excluding VAT in your management accounts, because the VAT you collect from customers generally goes to HMRC rather than being your restaurant income. Restaurant catering and hot takeaway food are generally standard-rated, with the standard UK VAT rate currently at 20%.

Should I treat my restaurant labour as a fixed or variable cost?

You will usually need to treat restaurant labour as a semi-variable cost because you may need a core team regardless of how busy you are, while extra staff hours may be added during busier services. Separating your regular staffing costs from demand-led hours can make your break-even calculation more useful.

How often should I calculate my restaurant break-even point?

You should review your break-even point regularly and recalculate it when your main costs, prices, opening hours or staffing arrangements change. Reviewing it every quarter can be a useful approach, while you may want to check it more often when costs are changing quickly.

What is the difference between my break-even sales and break-even covers?

Your break-even sales show the amount of revenue you need to generate, while your break-even covers show roughly how many customers you need to serve to reach that revenue. Looking at both figures can give you a more practical target for running your restaurant.

Can my restaurant be profitable but still have cash flow problems?

Yes, you can show a profit on your accounts while still having cash flow problems because payments for tax, suppliers, loans or equipment may be due before you receive enough money from customers. You should therefore use break-even analysis alongside cash flow forecasting rather than relying on it alone.

How do delivery apps affect my restaurant break-even point?

Delivery commissions and other delivery costs reduce the amount you keep from each order, so your break-even point may be different for delivery and dine-in sales. If you rely heavily on delivery, you should consider the contribution from each sales channel rather than using one margin for all your sales.

Can I calculate my break-even point before opening my restaurant?

Yes, you can estimate your break-even point before opening by working out your expected fixed costs, variable costs, menu prices, average customer spend and likely customer numbers. As you will have little trading history, testing different sales and cost scenarios can give you a more realistic picture than relying on one forecast.