What break-even means
Your break-even is the point where takings cover every cost: below it you lose money each month, above it you make some. Some costs are the same however busy you are, like rent, wages, energy and loan repayments: these are your fixed costs. Others come with each sale, like the food on the plate, the cup, the card fee or a delivery app’s commission: your cost of sales.
Each customer leaves what they spend, minus tax and the cost of what they bought. Your break-even is the number of customers whose leftovers add up to your fixed costs.
The formulas
Spend before tax = average spend ÷ (1 + tax %)
Left from each customer = spend before tax × (1 − cost of sales %)
Customers a month = fixed costs ÷ left from each customer
Customers a day = customers a month ÷ days open
A worked example
A café pays 9,000 a month in fixed costs: 3,000 rent, 4,500 wages, 600 energy and water, 500 loan repayments and 400 for everything else. Customers spend 12.00 on average, with 10% tax in it, so 10.91 before tax. Food, drink and card fees take 32% of that, which leaves 7.42 from each customer.
9,000 ÷ 7.42 = 1,213.2, so 1,214 customers a month. Open 26 days a month, that is 47 customers a day, and takings of about 14,560 a month. To make 3,000 a month on top, it needs 63 a day.
Ways to lower your break-even
Raise the average spend. A side, a dessert or a bigger size on the menu, set where people see it, adds to every order without adding customers. Lower the cost of sales by costing your dishes and fixing the ones that earn least. Look at fixed costs once a year: energy, insurance, subscriptions. And check the days you open: a day that brings fewer customers than its share of the costs lowers your profit.
Questions
What counts as a fixed cost?
Anything you pay each month however many customers come: rent, wages for your regular staff, energy, water, internet, insurance, licences, loan repayments, accounting and software. Count yourself too if you pay yourself a wage.
What do I enter as the cost of what I sell?
The share of each sale that goes on what was sold: the food and drink, cups and packaging, and the fees taken on each sale, like card fees or a delivery app’s commission. For a café or restaurant it is often between 25% and 40% of sales before tax.
How do I find my average spend per customer?
Divide your takings over a week or a month by the number of customers, or of receipts, in the same time. Your till or card reader usually shows both.
Does it work for a hair salon or barber?
Yes: enter the average bill per client as the spend, and the products used plus card fees as the cost of what you sell. The result is the clients a day you need to cover your month.
Is what I type saved or sent anywhere?
It is kept in your browser on this device, so it’s still there when you come back, and it is never sent to us or anyone else. The calculator works entirely on your device. “Clear all” removes it.