Restaurant breakeven analysis India — formula, worked example, calculator
Restaurant breakeven analysis for India — the contribution-margin formula, a worked example in INR, breakeven cover counts by format, and a step-by-step calculator.
Last updated 12 May 2026
About this piece. Most independent restaurant owners in India know roughly what they make in a good month and what they lose in a bad one. Far fewer know the monthly cover count below which the outlet bleeds cash. That number — the breakeven point — is the single most useful operating threshold an owner can carry in their head. This piece gives you the formula, a worked example in INR, and a calculator structure you can build into a Google Sheet today.
The two formulas that matter
Breakeven analysis answers one question: "How much sales (or how many covers) do I need this month so that I cover all costs and bank zero rupees of profit or loss?"
Two equivalent formulas, depending on whether you want to express breakeven in rupees or in covers:
1. Breakeven sales (₹) = Fixed costs / Contribution margin %
2. Breakeven covers (#) = Fixed costs / (Average ticket × Contribution margin %)
Where:
Contribution margin % = 1 – Variable cost %
Variable cost % ≈ COGS % + variable labour % + variable supplies %
Fixed costs = Rent + CAM + electricity (base) + manager + insurance + software
+ marketing retainer + depreciation + amortisation
The trick is classifying each cost as variable or fixed. Get this wrong and the breakeven number is wrong by 30–40%.
Variable vs fixed — a usable Indian-restaurant split
Pure variable / pure fixed is a textbook abstraction. In a real restaurant most costs are semi-fixed. The pragmatic split below works for a monthly model.
| Cost line | Treat as | Why |
|---|---|---|
| Food + beverage COGS | Variable | Moves directly with covers |
| Packaging (delivery / takeaway) | Variable | Per-order |
| Aggregator commission | Variable | % of net sales |
| Service / kitchen wages (extra hands during peak) | Variable | Roster-flex labour |
| Core wages (always-on cooks, manager, cleaning) | Fixed | Salaried / always-rostered |
| PF + ESI + bonus accrual | Fixed | Tied to core wages |
| Rent + CAM | Fixed | Lease-bound |
| Electricity (base load) | Fixed | Compressors, lighting, AC |
| Electricity (peak load) | Variable | Tandoor / kitchen equipment |
| Gas refills | Variable | Burner usage |
| Software, internet, telephony | Fixed | Subscription |
| Marketing retainer | Fixed | Monthly fee |
| Aggregator promotions | Variable | Per-campaign |
| Depreciation, amortisation | Fixed | Accounting |
A reasonable thumb-split for a typical Indian casual-dine outlet is 52–58% variable, 42–48% fixed of total monthly costs. QSRs lean more variable; fine-dines lean more fixed.
Worked example — a 60-cover NCR casual-dine outlet
Take the same composite outlet from the prime-cost piece. Monthly numbers:
| Line | INR | Type |
|---|---|---|
| Net sales (pre-GST, post-aggregator) | ₹18,00,000 | — |
| Food + bev COGS | ₹5,30,000 | Variable |
| Variable labour (peak roster flex) | ₹60,000 | Variable |
| Packaging + aggregator commission | ₹1,20,000 | Variable |
| Variable utilities (gas + peak power) | ₹40,000 | Variable |
| Total variable cost | ₹7,50,000 | — |
| Core wages + PF/ESI + manager | ₹4,32,000 | Fixed |
| Rent + CAM | ₹2,40,000 | Fixed |
| Base electricity + internet + software | ₹70,000 | Fixed |
| Marketing retainer + insurance | ₹35,000 | Fixed |
| Depreciation + amortisation | ₹50,000 | Fixed |
| Total fixed cost | ₹8,27,000 | — |
| Operating profit | ₹2,23,000 | — |
Now compute breakeven:
Variable cost % = 7,50,000 / 18,00,000 = 41.7%
Contribution margin % = 1 – 41.7% = 58.3%
Breakeven sales (₹) = 8,27,000 / 0.583 ≈ ₹14,18,500
Average ticket = ₹600 (illustrative for NCR casual-dine)
Breakeven covers = 14,18,500 / 600 ≈ 2,365 covers / month
≈ 79 covers / day
So this outlet needs ~79 covers a day to break even. It's currently doing about 100 covers a day on the ₹18 lakhs / month line. The 21-cover gap between current and breakeven is the margin of safety — about 21% cushion.
A margin of safety below 15% means a single 2-week soft patch (rains, exam season, festival lull) tips the month into loss. 25%+ is healthy; 35%+ is comfortable.
Breakeven cover counts by format — indicative ranges
The actual breakeven cover count for any outlet depends on rent, average ticket, and prime cost — which vary widely. The table below shows the shape of typical breakeven cover counts for outlets in the green-zone of unit economics in Indian Tier-1 cities.
| Format | Avg ticket (₹) | Contribution margin % | Fixed cost / month (₹) | Breakeven covers / day |
|---|---|---|---|---|
| QSR / cloud kitchen | 250 – 400 | 50 – 55% | 3 – 5 lakhs | 70 – 130 |
| Casual dine | 500 – 800 | 50 – 60% | 7 – 12 lakhs | 60 – 110 |
| Fine dine | 1,500 – 3,500 | 45 – 55% | 12 – 25 lakhs | 25 – 55 |
| Bar / pub | 700 – 1,500 | 50 – 60% | 8 – 15 lakhs | 35 – 75 |
The point of the table isn't the specific numbers — it's that breakeven cover counts converge in narrow bands per format. If your number is wildly outside the band, your fixed cost or contribution margin is probably mis-classified.
The calculator — what to build in a sheet
Five rows of inputs, five rows of computed output. Lock the formulas, update only the inputs.
Inputs (you edit):
A. Net sales (₹/month)
B. Total variable cost (₹/month)
C. Total fixed cost (₹/month)
D. Average ticket (₹)
E. Operating days in month (typically 28–30)
Outputs (computed):
1. Variable cost % = B / A
2. Contribution margin % = 1 – (B / A)
3. Breakeven sales (₹) = C / Output 2
4. Breakeven covers/month = Output 3 / D
5. Breakeven covers/day = Output 4 / E
6. Margin of safety % = (A – Output 3) / A
Add three sensitivity rows so you can see how breakeven moves when the world wobbles:
- What if rent goes up 10%?
- What if COGS goes up 2 points?
- What if average ticket falls 5%?
Each one shifts breakeven by 4–8% in either direction. The exercise of running these three "what-ifs" once a quarter is the difference between an outlet that responds to bad news in week one and one that wakes up in month three.
Three uses of the breakeven number
A breakeven cover count is not just a P&L footnote. Three operational uses:
- Daily target setting. The opening manager knows the day's "no-loss" cover number. Below that by lunchtime, the marketing lever is pulled (push a lunch combo, switch on aggregator boost). Above that by lunchtime, focus shifts to upsell and quality.
- Marketing budget sanity check. A campaign that promises 20 incremental covers per day is worth roughly
20 × ₹600 × 58.3% = ₹6,996/dayof contribution. Spend on the campaign is bounded by that. - Lease decision. A new outlet whose breakeven cover count exceeds the format's typical realistic peak cover count is a fail-safe rejection signal. Run the calculator before signing the lease, not after.
Where the breakeven calculation goes wrong
- Treating manager salary as variable — it isn't, it's fixed. Misclassifying inflates contribution margin %.
- Excluding depreciation and amortisation — they're real fixed costs over the asset life. Excluding them flatters the breakeven number.
- Using gross aggregator sales — same trap as the food cost piece. Always net of aggregator commission.
- Forgetting opening promotional discounts — early-stage outlets have heavy discounting that masks real contribution margin. Strip these out for the structural breakeven.
Every assumption you make in the variable-vs-fixed split is testable. Re-run the calculator at three months, six months, and twelve months with cleaner data and the breakeven number will sharpen.
What to do this week
- Pull last month's P&L line by line.
- Tag each line as variable or fixed using the table above.
- Compute breakeven sales and breakeven covers/day.
- Tape the breakeven covers/day number above the manager's station.
- Compare actual covers/day to the threshold every morning for two weeks.
The exercise takes about an hour. The number stays useful for a year. When rent renews or the menu re-prices, redo it — those are the two events that move breakeven materially.
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