How to calculate your break-even point
Contribution margin is what's left from each £1 of sales (ex VAT) after food, packaging, card fees, hourly wages and app commission.
- Add up your monthly fixed costs. These stay the same whether you serve 10 people or 1,000. Think rent, business rates and salaries.
- Work out your variable costs as a % of sales. These rise with every sale: ingredients, packaging, card fees, hourly staff and app commission.
- Find your contribution margin. 100% minus your variable cost %. If variable costs are 54% of sales, each £1 of sales leaves 46p for fixed costs.
- Divide fixed costs by the contribution margin. £9,000 ÷ 0.4625 = £19,459 of sales a month, ex VAT.
- Turn it into covers or orders. Divide by your average spend ex VAT, then by your trading days.
Always use sales without VAT. VAT isn't your money. If your average order is £25 including 20% VAT, only £20.83 is yours.
Fixed costs vs variable costs in a UK food business
| Fixed (monthly £) | Variable (% of sales) |
|---|---|
| Rent or mortgage | Food and drink cost (100% − your GP %) |
| Business rates (after any relief) | Packaging (takeaway and delivery) |
| Salaried staff, plus employer NI and pension | Hourly staff, if you rota to how busy you are |
| Energy and water (standing charges and base use) | Card fees |
| Insurance | Delivery-app commission |
| Software (EPOS, ordering, accounting) | Cleaning and other consumables |
| Music licence, waste collection, pest control | Own delivery driver costs (per order) |
| Accountant, bank charges | |
| Loan repayments (for cash break-even) | |
| Marketing you pay every month |
Some costs are a bit of both. Energy has a standing charge plus usage. Put the steady part in fixed costs and leave it there. A rough split is fine. The point is the trend, not the penny.
A few UK costs people forget:
- Employer National Insurance is 15% on pay above £96 a week per employee (2026–27). The Employment Allowance can cut up to £10,500 off your annual bill.
- Business rates in England changed on 1 April 2026. Eligible retail, hospitality and leisure properties with a rateable value under £500,000 now have their own lower multipliers: 38.2p under £51,000 and 43p from £51,000. Small Business Rate Relief still applies to small premises (no rates on one property with a rateable value of £12,000 or less). Your council decides eligibility, so use the figure on your bill. Scotland and Wales have their own systems.
- VAT on app commission. Delivery apps charge 20% VAT on their commission. You can only reclaim it if you're VAT-registered.
Worked example 1: 40-cover restaurant
Fixed costs: £18,500 a month
| Cost | £ / month |
|---|---|
| Rent | 4,500 |
| Business rates | 900 |
| Head chef and manager (salaries, NI, pension) | 8,200 |
| Energy and water | 2,100 |
| Insurance | 250 |
| Software and licences | 450 |
| Accountant | 300 |
| Loan repayment | 1,200 |
| Marketing | 300 |
| Repairs and other | 300 |
| Total | 18,500 |
Variable costs: 55.5% of sales. Food and drink 30%, hourly staff 22%, card fees 1.5%, other 2%. So the contribution margin is 44.5%.
Average spend: £32 per cover including VAT, so £26.67 ex VAT. Each cover contributes £11.87.
- Break-even sales: £18,500 ÷ 0.445 = £41,573 a month ex VAT (£49,888 inc VAT)
- Break-even covers: £41,573 ÷ £26.67 = 1,559 a month, about 60 a day over 26 trading days
- At 1,800 covers a month: profit of £2,860, with a margin of safety of 13.4%
- To make £3,000 a month profit: 1,812 covers (70 a day)
Worked example 2: takeaway, direct orders vs delivery apps
Fixed costs: £9,000 a month. Average order £25 including VAT (hot food at 20%), so £20.83 ex VAT.
Variable costs: 53.75%. Food 30%, packaging 4%, card fees 1.75%, hourly staff 18%. Contribution margin 46.25%, or £9.64 per order.
| Order mix | Contribution margin | Orders to break even (a month) | Orders a day (26 days) |
|---|---|---|---|
| All direct orders | 46.25% | 935 | 36 |
| 40% via an app at 14% commission | 40.65% | 1,063 | 41 |
| 40% via an app at 30% commission | 34.25% | 1,262 | 49 |
The 14% and 30% rates are Just Eat's UK rates for restaurants that deliver themselves and for Just Eat delivery, as listed on our Just Eat commission page (read 11 Oct 2026). They're used here to show the effect. This example assumes you're VAT-registered and reclaim the VAT on commission, and keeps the same order value on every channel. When the app delivers, you also save your own driver costs, so cut those from variable costs in the calculator.
The lesson: every order you move from an app to your own commission-free ordering page lowers your break-even point. See the full Just Eat commission breakdown, or compare Just Eat, Deliveroo and Uber Eats.
6 ways to lower your break-even point
- Raise GP. Re-cost dishes and reprice for your target with the GP calculator. A 3-point GP gain cuts the takeaway's break-even from 935 to 878 orders a month.
- Raise average spend. Add-ons, sides, drinks and meal deals. Every £1 more per order (ex VAT) adds about 46p of contribution in example 2.
- Rota to demand. Hourly wages are variable only if you match staff to busy times. Plan it with the staff rota maker.
- Move regulars to direct orders. App commission is often your single biggest variable cost after food.
- Challenge fixed costs once a year. Energy contracts, insurance, software you no longer use, and your business rates valuation.
- Don't forget drinks. Drinks usually carry a higher GP than food. Check yours with the drinks GP calculator.
Setting prices too? The menu price calculator prices each dish for each channel, and our guide to VAT on takeaway food explains which rate applies. For the bigger picture, read restaurant margins in 2026.
Free restaurant P&L template
Break-even tells you the target. A profit and loss (P&L) statement tells you how you actually did. Our free template is a simple monthly P&L for a UK food business. Download it from the calculator above as an Excel file. It opens in Google Sheets, Numbers and LibreOffice too.
| Section | Lines |
|---|---|
| Sales (ex VAT) | Food · Drinks · Delivery-app sales · Other income |
| Cost of sales | Food purchases · Drinks purchases · Packaging (opening stock + purchases − closing stock) |
| Gross profit | Sales − cost of sales, with GP % |
| Labour | Wages and salaries · Employer NI · Pension · Holiday pay |
| Overheads | Rent · Business rates · Energy and water · Insurance · Repairs · Software · Card fees · App commission · Marketing · Accountant · Other |
| Operating profit | Gross profit − labour − overheads, with % of sales |
| Below the line | Loan interest · Depreciation · Profit before tax |
It has 12 monthly columns plus a year total, and shows each line as a % of sales. Fill in last month, and the template works out your fixed costs and variable cost % for the break-even calculator.
Typical UK ranges to compare against (rules of thumb, not targets): food and drink cost 28%–35%, labour 25%–35%, rent 6%–12% of sales. These aren't from an official benchmark, so treat them as a rough check only. If food plus labour is over 65% of sales, it's hard to make money.