Most operators know food cost percent. Fewer know the exact sales line where losses stop.
That line is your break-even sales target. If it is not clear, daily sales goals are mostly guesswork.
This guide gives you a US-specific method you can run in under 20 minutes: fixed costs, variable cost ratio, monthly break-even, and daily target.
Quick Summary
- Break-even sales = Fixed Costs / (1 - Variable Cost %)
- Contribution margin ratio = 1 - Variable Cost %
- Convert monthly break-even into a daily sales target for operations
- Recalculate monthly when costs are moving fast
Why Monthly Recalculation Matters in the US
US restaurant inflation is still running above headline CPI. In the BLS release for December 2025 (published January 13, 2026):
- All items CPI: +2.7%
- Food away from home: +4.1%
- Full-service meals and snacks: +4.9%
When your menu prices stay flat while costs move, break-even rises silently. That is why monthly recalculation is safer than waiting for quarterly reviews.
Step 1) List Monthly Fixed Costs
Fixed costs are expenses you pay even if sales are slow.
Typical restaurant fixed costs:
- Rent + CAM
- Salaried management payroll
- Insurance
- Software subscriptions
- Base utilities
- Loan payments
- Minimum required service contracts
Add them to get total monthly fixed costs.
Step 2) Estimate Variable Cost %
Variable costs move with sales volume. Use recent 30-day averages.
- Food cost %
- Hourly labor %
- Payroll taxes tied to hourly labor (if tracked as variable)
- Credit card processing %
- Packaging and delivery fees %
Variable Cost % = Food % + Labor % + Other Variable %Important US rule: calculate break-even from net sales collected by the business. Sales tax is pass-through money, not operating revenue.
Step 3) Break-Even Formula
Break-even sales = Fixed Costs / (1 - Variable Cost %)Worked Example (Neighborhood Cafe)
Monthly fixed costs: $24,000
Variable costs:
- Food: 30%
- Hourly labor: 26%
- Card + packaging + delivery mix: 6%
Variable Cost % = 62%
Break-even sales = 24,000 / 0.38 = $63,158Daily targets:
- $2,105/day (30 days open)
- $2,429/day (26 days open)
This is the survival line. Profit starts above it.
Turn the Number Into Weekly Action
Do not stop at the monthly number. Break it into weekly and daypart targets:
- Weekday lunch target
- Weekday dinner target
- Weekend target
If one daypart is consistently under target, adjust pricing or menu mix there first.
Common Mistakes
- Mixing owner draw into different buckets each month
- Using menu price assumptions instead of POS-collected net sales
- Forgetting discounts, comps, refunds, and delivery commissions
- Tracking food cost but not hourly labor drift
Official Sources To Bookmark
- BLS CPI chart by category (Dec 2025)
- BLS CPI news release archive (Dec 2025 release)
- SBA break-even analysis guide
Related Guides
If you want this automated, KitchenCost updates recipe cost and margin targets as supplier prices change.