Disclosure: This article is written by Shaun McManus, founder of SmartPubTools and creator of the Restaurant Console. All operational claims reflect genuine experience at Teal Farm Pub, Washington.
What Is the Break-Even Point Formula for a UK Restaurant?
Key Takeaway: Break-even revenue = Fixed costs ÷ Contribution margin ratio (your GP%). For a restaurant with £3,500/week fixed costs and 65% GP%, break-even revenue is £5,385/week. Below that you are losing money on every service. Above it, every pound of revenue generates 65p of gross profit to cover your fixed costs and build net profit. Know this number. Track it weekly.
Running this problem at your pub?
Here's the system I use at The Teal Farm to fix it — real-time labour %, cash position, and VAT liability in one dashboard. 30-minute setup. £97 once, no monthly fees.
Get Pub Command Centre — £97 →No monthly fees. 30-day money-back guarantee. Built by a working pub landlord.
By Shaun McManus | Last Updated: May 2026
The Break-Even Formula — Step by Step
Break-even revenue = Fixed costs ÷ GP% (expressed as a decimal)
Break-even covers = Break-even revenue ÷ Average spend per cover
This formula works because GP% is your contribution margin ratio — for every £1 of revenue, GP% tells you how many pence are available to cover fixed costs. Once enough revenue has been generated to cover all fixed costs, you reach break-even. Every pound of revenue above break-even generates GP% in net profit (before tax).
Worked Example — Using the Restaurant Console Default
| Input | Figure | Source |
|---|---|---|
| Weekly fixed costs | £3,500 | Business Profile module baseline |
| GP% (contribution margin) | 65% | Target GP% from Business Profile |
| Break-even revenue | £5,385/week | £3,500 ÷ 0.65 |
| Average spend per cover | £28 ex-VAT | Sales module average |
| Break-even covers | 192 covers/week | £5,385 ÷ £28 |
| Break-even covers per day (7-day) | 27 covers/day | 192 ÷ 7 |
At 192 covers per week at £28 ATV, this restaurant exactly covers its fixed costs at 65% GP%. Every cover above 192 per week generates £18.20 in net contribution (£28 × 65%). At 300 covers per week, contribution above break-even = 108 covers × £18.20 = £1,965.60/week profit before tax.
What Fixed Costs to Include
| Fixed cost | Include? | Notes |
|---|---|---|
| Rent | Yes | Monthly rent ÷ 4.33 = weekly equivalent |
| Business rates | Yes | Annual bill ÷ 52 |
| Insurance | Yes | Annual premium ÷ 52 |
| Utilities | Yes | Monthly bill ÷ 4.33 |
| Fixed management salaries | Yes | Including employer NI |
| Loan repayments | Yes | Weekly equivalent |
| Food cost | No | Variable — already accounted for in GP% |
| Variable labour (zero-hours, part-time) | No | Variable — already accounted for in GP% calculation |
The most common break-even calculation mistake is including variable costs (food cost, variable labour) in the fixed cost figure. These are already accounted for in your GP% — including them again in fixed costs double-counts them and produces an overstated break-even figure.
How GP% Affects Your Break-Even — The Sensitivity Table
| GP% | Break-even revenue (£3,500 fixed costs) | Break-even covers (£28 ATV) | Covers per day (7 days) |
|---|---|---|---|
| 55% | £6,364 | 227 | 32 |
| 60% | £5,833 | 208 | 30 |
| 65% | £5,385 | 192 | 27 |
| 70% | £5,000 | 179 | 26 |
| 68% | £5,147 | 184 | 26 |
Moving from 60% to 65% GP% reduces your break-even by 16 covers per week. That is 16 fewer covers you need to fill before you start making money — every week. This is why menu engineering and portion control are not optional: they directly reduce the number of covers you need to break even. See the restaurant GP% calculator guide and menu engineering guide.
Break-Even Per Service — Why Weekly Is Not Enough
Weekly break-even tells you the minimum revenue target. Service-level break-even tells you whether each individual lunch and dinner is profitable. A restaurant that hits its weekly break-even but has a loss-making lunch service every day is subsidising lunch with dinner — which means the lunch service is consuming capital that could otherwise be profit.
To calculate service-level break-even: allocate your weekly fixed costs across services (e.g. 40% to lunch, 60% to dinner based on cover distribution). Then apply the same formula per service. If your Monday lunch cannot reach break-even in isolation even at full capacity, the economics of running Monday lunch should be examined.
The restaurant break-even calculator guide covers the full break-even framework including table turn rate and service-level analysis. See also the daily sales report guide for tracking actual vs break-even per service.
Run Your Restaurant Financials From One System — £97 One-Time
The Restaurant Console Business Profile module stores your weekly fixed cost baseline (default £3,500) and target GP%. The Weekly Cockpit shows actual revenue vs break-even target with red/amber/green RAG status — so you know by Monday whether last week covered fixed costs, not at month-end.
✓ Business Profile: configure weekly fixed costs and GP% targets
✓ Weekly Cockpit: actual vs break-even with RAG status
✓ Your data stays in YOUR Google Drive
✓ No monthly fees. No subscription. £97 once.
Frequently Asked Questions
How do you calculate break-even point for a restaurant?
Break-even revenue = Fixed costs ÷ GP%. Example: £3,500 ÷ 0.65 = £5,385/week. Break-even covers = £5,385 ÷ £28 ATV = 192 covers/week.
What fixed costs should I include in a restaurant break-even calculation?
Rent, rates, insurance, utilities, fixed management salaries, loan repayments. Do NOT include food cost or variable labour — these are already in your GP% figure.
How does GP% affect restaurant break-even?
Higher GP% means each cover covers more fixed cost. Moving from 60% to 65% GP% at £3,500 fixed costs reduces break-even by 16 covers/week — every week, permanently.
How often should a restaurant check its break-even?
Weekly. A week below break-even identified on day 8 can be corrected. A month below break-even identified on day 35 cannot be recovered.
Should break-even be calculated on gross or net revenue?
Always net-of-VAT. Gross revenue includes VAT collected for HMRC. Using gross understates the covers needed to actually cover your costs.
Running your pub on gut feel?
The Pub Command Centre gives you wet GP%, cellar checks, staff cost and weekly P&L — from your phone, every shift. £97 once. No subscription.
See the Pub Command Centre →