Basic information about the features of the break-even point for a restaurant

Новости экономики

23.06.24

If you are the owner of a restaurant, you will have to take into account many expenses, including the cost of renting the facility, utility costs, inventory and employee salaries.

One of the most important factors determining the success of an institution is the Break-Even Point for a Restaurant.

How to determine break-even points?

The break-even point is the level of sales during which a restaurant or public institution can cover all its expenses and makes a profit. This is the moment when the institution does not lose or earn financial resources. Knowledge of the specifics of this moment is necessary in order to make optimal business decisions and ensure a constant flow of income

Knowing this concept has several advantages:

• setting realistic goals;
• cost control;
• making informed decisions.

Understanding how much you need to sell monthly to reach the break-even level allows you to set achievable and realistic sales goals. This helps to plan marketing and advertising campaigns, as well as improve the overall business development strategy. Break-even analysis allows you to control expenses more effectively. In this way, you can determine which costs are fixed and which are variable, and how they affect the overall profitability of your restaurant. Understanding the financial condition of a restaurant helps you make informed business decisions. This includes expanding the menu, conducting promotions and discounts, as well as possible increases or decreases in prices for dishes.

Calculation rules

The calculation is performed in several steps. First, you should determine the financing and variable costs. The main costs, in this case, do not depend on the volume of production or sales. For example:

• rent a room;
• salary of administrative staff;
• utilities.

Variable costs are expenses that, taking into account the volume of production, begin to change. For example, the cost of food, the wages of cooks and waiters. It is also necessary to calculate the variable costs per unit of production and multiply by the number of units sold. It is also necessary to determine the average selling price of one unit of production. All this will help to determine the financial condition of the business as accurately as possible and take the necessary measures to improve it.