Break-Even Formula
Break-even revenue = Fixed costs / Contribution margin % Break-even covers = Break-even revenue / Average check Margin of safety % = (Expected revenue - Break-even revenue) / Expected revenue
Finance & Business Plan
Break-even revenue = Fixed costs / Contribution margin % Break-even covers = Break-even revenue / Average check Margin of safety % = (Expected revenue - Break-even revenue) / Expected revenue
Multi-scenario break-even runs the break-even calculation three times, under a pessimistic, an expected and an optimistic set of assumptions. Instead of a single break-even number, you see a range: how much revenue you must take to cover all costs if things go badly, if they go as planned, and if they go well. This makes the analysis far more useful for decision-making because real businesses never land exactly on the central case.
Break-even revenue equals fixed costs divided by the contribution margin percentage. The contribution margin is the share of each euro of sales left after variable costs. With 120,000 euros of fixed costs and a 70% contribution margin, break-even revenue is 120,000 / 0.70 = 171,429 euros. Dividing that by the average check gives the number of covers you must serve to break even.
The margin of safety is how far your expected revenue sits above break-even, as a percentage. It is (expected revenue - break-even revenue) / expected revenue. With expected revenue of 240,000 euros and break-even of 171,429, the margin of safety is 28.6%, meaning sales could fall by that much before the business starts losing money. The higher the margin of safety, the more resilient the business.
Break-even is driven by fixed costs and contribution margin, so changing either shifts it. In the pessimistic case fixed costs rise 10% to 132,000 and contribution margin falls to 65%, pushing break-even up to 203,077 euros. In the optimistic case a 73% contribution margin pulls break-even down to 164,384. Seeing how sensitive the number is to those two levers tells you where to focus: cost control or margin improvement.
Two levers: reduce fixed costs, or raise the contribution margin (by increasing prices or cutting variable cost per cover). Because break-even is fixed costs divided by contribution margin, even a few points of margin improvement can move the break-even meaningfully. The sensitivity view in this calculator shows exactly how much each lever shifts the point so you can prioritise.