A full restaurant can close because it runs out of cash. Break-even tells you how much you must take in to cover costs, but cash flow pays suppliers, wages and F24 tax payments. This guide gives you the formulas you actually use, Italian food-service benchmarks and a calculation table ready to adapt to your P&L. No theory: only the numbers you use to decide prices, shifts and orders.
Break-even: the formula that matters
Break-even point (BEP) is the revenue that brings profit to zero: you cover all costs and earn nothing. It is calculated like this:
BEP (EUR) = Monthly fixed costs / Contribution margin %
Contribution margin (CM) is what remains from each euro collected after variable costs:
CM % = (Revenue - Variable costs) / Revenue
Concrete example. Total variable costs (food + variable part of labor + POS commissions + volume-linked utilities) equal 45% of revenue. CM = 55%. With EUR 18,000 of monthly fixed costs:
- BEP = 18,000 / 0.55 = EUR 32,727/month revenue, VAT excluded.
- Over 26 opening days, you need EUR 1,259/day just to break even.
- With an average ticket of EUR 14, that means 90 transactions/day to avoid losing money.
Everything you collect above BEP enters at the CM%: every extra EUR 100 leaves EUR 55 of gross profit. That is why break-even is not an accounting exercise. It is the threshold below which every below-budget night costs real cash.
Fixed vs variable costs: classify them correctly
Get this distinction wrong and the whole calculation is false. Operating rule: a cost is variable if it changes with the number of covers; it is fixed if you pay it even with the shutter down.
Typical fixed costs:
- Rent and condominium/service charges for the premises.
- Structural staff: the core team that is always there, even on dead days.
- Base utilities and fees (management software, fiscal cash register, software, subscriptions).
- Insurance, accountant, labor consultant, HACCP/self-control management.
- Depreciation and leasing/financing installments on equipment and furniture.
- TARI waste tax, advertising/signage tax, possible SIAE/SCF fee if you play music.
Typical variable costs:
- Food & beverage cost (raw materials).
- On-call staff, overtime and extra shifts linked to peaks.
- POS/card commissions (indicatively 0.5-1.5% per transaction) and delivery fees (Glovo/Deliveroo/Just Eat: typically 25-35% of gross order value).
- Takeaway packaging and consumables.
- Variable share of utilities (ovens, fridges, air conditioning in hot months).
Labor is hybrid: part is fixed, because you always staff it; part follows volume. Split it into the two lines. Do not put all of it on one side: this classification error can inflate or deflate BEP by 10-15%.
Cash is not profit: why a full restaurant runs dry
The P&L tells you whether you make money; the bank statement tells you whether you survive. They are different, and a full restaurant can enter cash stress for very concrete reasons:
- Collected VAT is not yours. On food service you apply 10% VAT: you collect that money but pass it to the State. Keeping it in the account and treating it as revenue is the number one mistake.
- Timing mismatch between receipts and payments. Cash and POS settle immediately, but delivery may pay you after 15-30 days; suppliers are often paid at 30 days; wages leave at month-end; F24 leaves on the 16th.
- Inventory and stock. Filling the cold room before a weekend does not hit monthly profit if it remains inventory, but it is cash leaving today.
- Investments and debt. A new fryer is depreciation spread across years in the P&L, but it is a cash outflow now, or an installment you do not see in profit.
- Tax advances. In June and November you pay IRPEF/IRES advances and contributions: the monthly P&L does not show them until they leave the account.
Always keep two separate views: monthly P&L (profit) and weekly cash forecast (real inflows/outflows, projected balance for 4-8 weeks). If you look only at profit, you discover the liquidity crisis after it has already exploded.
Seasonality and liquidity reserve
Almost no venue earns the same every month: tourist locations, office-canteen formats, gelato shops and beach clubs live on peaks. Management is cash, not motivation.
- Build a month-by-month budget, not an annual total divided by twelve. In months below break-even, you already know you will burn cash; the important thing is having set it aside first.
- Set aside money during strong months to cover weak ones. Practical rule: the CM from months above BEP goes into a separate account, not into operating working capital.
- Keep a liquidity reserve of 2-3 months of fixed costs in a dedicated account, untouchable for daily management.
- In dead months, cut what can be cut: reduce variable shifts, freeze non-urgent orders, renegotiate supplier due dates. Do not touch tax provisions.
- Seasonal rent or reduced rent in low season can be negotiated. Ask for it in writing.
Daily KPIs: what to check every night
Five numbers, every day, from the management system. Not at month-end: at day-end, while you can still correct course.
- Daily revenue net of VAT vs that day's budget. The primary signal.
- Average ticket = revenue / number of transactions. Falling? Upselling, mix or pricing problem.
- Covers / transactions = real volume. Separates traffic drop from spend drop.
- Daily food cost % (product consumption / revenue). Food-service benchmark: 28-35%. Above 35%, investigate portions, waste, theft and purchase prices.
- Labor cost % (labor cost / revenue). Benchmark: 28-35%. The sum food + labor (prime cost) must stay below 60-65%: it is the first signal of whether the venue is healthy.
Also watch waste and the number of voids/cancellations on the fiscal cash register: they are a signal of typing errors or cash shortages.
VAT, F24 and provisions: the discipline that saves you
Tax is not improvised on deadline day. It is set aside every day.
- 10% VAT on food service: settle it monthly or quarterly and set it aside day by day. Open a sub-account and move VAT there as soon as you collect it. It is not working capital.
- F24: every 16th of the month you pay periodic VAT, employee withholding tax and INPS contributions. Put it in the calendar and have funds ready by the 10th.
- IRPEF/IRES advances (typical deadlines June and November) and related contributions: they weigh heavily, so budget them from January.
- TFR and 13th salary: they accrue every month and are paid in December or on termination. Set aside the monthly accrual; do not find yourself short before Christmas, when 13th salary + tax advances + festive orders hit in the same month.
- Provision rule: every week move VAT, contributions/withholding and a share of profit tax to separate accounts. As a rough guide, 5-8% of takings for profit tax, calibrated with your accountant based on your regime. What remains in the operating account is truly spendable.
Table: monthly break-even calculation
| Item | Amount (EUR) | % of revenue |
|---|---|---|
| Monthly revenue (net of VAT) | 32,727 | 100% |
| Food & beverage cost | 9,818 | 30.0% |
| Variable labor (extra shifts) | 3,273 | 10.0% |
| POS + delivery + packaging commissions | 1,636 | 5.0% |
| Total variable costs | 14,727 | 45.0% |
| Contribution margin | 18,000 | 55.0% |
| Rent + service charges | 6,000 | |
| Fixed staff (structure) | 7,500 | |
| Utilities, fees, software | 1,800 | |
| Consultants, insurance, HACCP | 1,200 | |
| Depreciation / leasing installments | 1,500 | |
| Total fixed costs | 18,000 | |
| Monthly BEP = Fixed / CM% | 32,727 | |
| Daily BEP (26 days) | 1,259 | |
| Transactions/day (EUR 14 ticket) | 90 |
Adapt the numbers to your P&L: change food cost and delivery mix and CM% moves immediately. If delivery weighs a lot (30% fee), split it from dining-room sales: it has a different CM and shows the real break-even of on-premise service, where you have more levers.
Key numbers
- Food-service VAT: 10%. Set it aside on the same day you collect it.
- Prime cost (food + labor): keep it below 60-65% of revenue.
- Healthy food cost in food service: 28-35%.
- Healthy labor cost: 28-35%. Watch the tax wedge and CCNL Pubblici Esercizi, renewed in 2024.
- Delivery fees: 25-35% of gross order value, the revenue that evaporates fastest.
- POS commissions: indicatively 0.5-1.5% per transaction.
- Liquidity reserve: 2-3 months of fixed costs in a dedicated account.
- Average CM% for bar/food service: typically 50-60%. Below 50%, breaking even through volume alone becomes difficult.
- Profit-tax provision: rough guide 5-8% of takings, calibrated with your accountant.
Operating checklist
- Fixed and variable costs separated, with labor split fixed/variable
- CM% and monthly/daily BEP known and updated
- Required transactions per day to break even known
- Monthly P&L AND weekly cash forecast kept, with projected balance 4-8 weeks ahead
- 10% VAT moved to a separate account on the same day it is collected
- F24 funds ready by the 10th of each month (VAT, withholding, INPS)
- VAT, contributions, tax share, TFR and 13th salary accruals set aside every week
- Reserve of 2-3 months of fixed costs, untouchable
- Daily revenue, average ticket, covers, food cost % and labor cost % checked every night
- Prime cost checked below 60-65%
- Month-by-month budget that accounts for seasonality
- Delivery accounted separately (25-35% fee) to see real dining-room margin
- Commercial documents issued through fiscal cash register, with voids/cancellations monitored