Break-Even Analysis
Calculation of the sales volume required to cover all fixed and variable costs, the point at which a restaurant becomes profitable.
Related Terms
Fixed Costs
Expenses that remain constant regardless of sales volume, including rent, insurance, management salaries, and equipment depreciation.
Variable Costs
Expenses that fluctuate with sales volume, primarily food costs, hourly labor, and packaging. Expressed as a percentage of sales.
Contribution Margin
Revenue minus variable costs (food and hourly labor), representing the dollars available to cover fixed costs and generate profit.
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