Opening a restaurant
Restaurant break-even point and RevPASH: how many covers you need
By RestoGrowth Advisor Editorial Team · Published
Break-even sales = monthly fixed costs ÷ (1 − variable costs as a share of sales). It is the sales you need before the month earns its first dollar of profit. RevPASH (revenue per available seat hour) is sales ÷ (seats × hours open), and shows how hard each seat works while you are open.
Fixed costs and variable costs
Break-even starts with sorting your costs into two piles.
Fixed costs stay about the same whether you are busy or quiet: rent and occupancy, salaried managers, insurance, utilities, software subscriptions and equipment leases.
Variable costs rise and fall with sales: food and drink, hourly labor (you schedule more people on busy nights), card fees, to-go packaging and supplies. Write these as a percentage of sales.
Some costs are a mix. Utilities rise a little when you are busy; a manager may pick up shifts. Put each cost where most of it belongs and be consistent from month to month.
The break-even formula
Every dollar of sales first pays its own variable costs. What is left over, the contribution margin, pays the fixed costs. Once those are covered, the rest is profit.
Break-even sales (monthly) = fixed costs ÷ contribution margin %
Break-even covers per day = break-even sales per day ÷ average spend per guest
If variable costs reach 100% of sales, no amount of sales breaks even: every sale loses money. Fix pricing or costs first.
Worked example
Here is a month at an example sit-down restaurant with 60 seats, open 10 hours a day, 30 days a month.
| Rent and occupancy | $9,000 |
|---|---|
| Salaried managers | $8,000 |
| Insurance and legal | $1,500 |
| Utilities and trash | $2,500 |
| Software and equipment | $1,000 |
| Fixed costs | $22,000 |
| Food and drink | 30% |
|---|---|
| Hourly labor | 22% |
| Card fees, packaging and supplies | 8% |
| Variable costs | 60% |
| Contribution margin (100% − 60%) | 40% |
|---|---|
| Break-even sales a month ($22,000 ÷ 40%) | $55,000 |
| Break-even sales a day (÷ 30 days) | $1,833 |
| Break-even covers a day at $35 a guest | 53 |
This example restaurant actually sells $72,000 a month, or $2,400 a day. It passes break-even about three-quarters of the way through the day, and the $17,000 a month above break-even earns 40 cents on the dollar: about $6,800 of profit before tax and loan payments.
Work out your break-evenFree Daily Break-Even Calculator. No sign-up needed.RevPASH: revenue per available seat hour
Break-even tells you how much you need to sell. RevPASH tells you how well you use the room to sell it. The measure comes from Cornell’s restaurant revenue management research (Sheryl Kimes), which argues it shows more of a restaurant’s performance than average check or cost percentages alone.
RevPASH = sales ÷ available seat hours
| Available seat hours a day (60 × 10) | 600 |
|---|---|
| RevPASH needed to break even ($1,833 ÷ 600) | $3.06 |
| Actual RevPASH ($2,400 ÷ 600) | $4.00 |
The monthly average hides the pattern. Work it out by hour, too. A Friday 7–8 PM hour and a Tuesday 3–4 PM hour have the same number of seats but very different sales. The busy hours tell you where faster turns pay off; the quiet hours tell you where an offer or shorter opening hours might.
Faster table turns in busy hours
When guests are waiting for tables, a shorter average turn time adds covers without adding seats. Our calculator models Friday and Saturday dinner (6:00–9:30 PM) with three-quarters of seats in use.
For the example restaurant, cutting the average turn from 90 to 75 minutes adds about 21 covers per busy dinner, about $735 at $35 a guest, or $5,880 a month over 8 such nights.
Ways to shorten turns without rushing guests:
- Take the drink order as soon as guests sit down.
- Bring the check when plates are cleared, and take payment at the table.
- Bus and reset tables quickly; it is often the biggest hidden delay.
- Match table sizes to the party sizes you actually get, so a two-top doesn’t hold a four-top.
How to lower your break-even point
- Raise the contribution margin. A lower food cost or better scheduling raises the share of each dollar that pays fixed costs. See the prime cost guide.
- Lower card fees. They are a variable cost too. The card fee calculator shows whether you are paying more than a fair rate.
- Promote dishes that earn more per plate. The free Menu Review helps you find them.
- Question each fixed cost once a year. Software, equipment leases and insurance renew quietly.
Common mistakes
Frequently asked questions
How do you calculate a restaurant’s break-even point?
Add up your monthly fixed costs, then divide by your contribution margin: 100% minus your variable costs as a share of sales. For example, $22,000 of fixed costs at a 40% contribution margin needs $55,000 of sales a month.
What is RevPASH?
Revenue per available seat hour: your sales divided by seats times hours open. It shows how well you use your seats over time, and is most useful worked out hour by hour.
Is labor a fixed or a variable cost?
Salaried managers are usually fixed. Hourly staff you schedule up and down with sales are usually treated as variable. Pick one approach and use it every month so the numbers compare.
Do faster table turns always make more money?
Only when guests are waiting for a table. If the room is not full, a shorter turn time just ends the visit sooner, so focus on bringing guests in during quiet hours instead.
Sources
- Sheryl Kimes, “Restaurant Revenue Management”, Cornell Center for Hospitality Research reportUsed for: RevPASH (revenue per available seat hour) and the two levers: duration management and demand-based pricing
Examples use an invented example restaurant with round numbers. See how we calculate for the formulas behind our tools, and our editorial policy for how guides are checked. Spotted a mistake? Tell us and we will fix it.