Understanding your break-even point, you may make the decision to close temporarily to avoid losing more money on your variable costs. As discussed below, your restaurant business has some costs that are fixed, to be paid no matter what, and some costs that are variable. If you are currently unable to hit your break-even point with your restaurant sales, this means your restaurant is losing money by staying in business. When You Should Consider Closing Temporarily Consider offering a takeout menu that simultaneously allows you to slim down your inventory and minimize your prime costs. If you are doing delivery only, you will likely need to adjust your menu offerings anyway, to pivot toward foods that keep well during delivery transit. Consider reducing your food costs by limiting the number of menu items in a way that allows you to streamline your inventory.

If you are able to still reach your break-even point or make a profit, you may want to adapt to the decrease in demand by adjusting your menu offerings. If your state or municipality is allowing restaurants to be open, whether that’s for delivery only or full service, you still are probably experiencing a slow-down in business. How to Determine If You Should Trim Menu Offerings When you know this metric, you are better able to determine at which point it makes sense to cut costs, or at which point you need to reconsider your options. Information about your key restaurant operations can help you navigate your business through these uncertain times, while still providing for your staff and customers.Ĭalculating your restaurant break-even point will give you an idea of what revenue is needed for your business to be profitable.

Understanding your break-even analysis at this critical juncture can help you assess risk and make the most well-informed decisions you can. However, there will undoubtedly be an impact on all businesses, including all owners, managers, servers, chefs, delivery drivers, and more in the food business. With a constantly-changing understanding of the public health ramifications of COVID-19, no one can say for sure how restaurants are going to be affected. apart), modifying your menu to serve takeout, or closing temporarily. If your state allows dine-in, or perhaps delivery only, you are working to make critical decisions about staying open, changing your dining options (for instance, only seating customers 6 ft. Regulations and public advisories for restaurants during the coronavirus pandemic range widely throughout the country.

Break even analysis formula