Covers Break Even

The covers break even indicates the minimum number of customers (covers) your restaurant must serve to cover all monthly fixed costs. It is the point where revenue equals fixed expenses, with no profit or loss.

The calculation divides monthly fixed costs by the average check. The result indicates how many total covers are needed per month. Dividing by opening days gives the minimum daily covers needed to cover expenses.

Monthly fixed costs include: rent, staff salaries, utilities (electricity, gas, water), insurance, equipment leasing payments, accounting fees, management software and any recurring expense that does not vary with the number of customers.

You can improve the break even in two ways: by reducing fixed costs (renegotiating rent, optimizing staff, reducing energy waste) or by increasing the average check (upselling, tasting menus, premium drinks, desserts and coffee).

Three figures: the monthly fixed costs of the venue, the average spend per cover and the number of days open in the month. From those come the minimum covers per day.

By dividing the monthly fixed costs by the average spend, and then the monthly total by the days open. Both results are rounded up to the next whole cover.

Rent, wages, utilities and insurance, that is, the costs that stay the same whatever the number of covers served. The break even calculation starts from that sum.

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