Cost Control – The Breakeven Point

29Aug08

The BreakEven point?

Many of us know what’s the breakeven point in accounts – It’s especially important to constantly update, analyze, scan and learn from the restaurant cost sheet (below) as we move along in a new business. Getting regular updates regarding this serves many purpose – And today, we’re going to look into what data will this chart serve and how we can take the analyze; on the plus, move towards the next step.

Break Even Point

Break Even Point

Definition of Breakeven Point

The Breakeven point literally means the amount of Total Revenue (Gross Profit) is equal to the amount of Total Expense (Costs). Thus, there are no losses or gains in that particular point. Anything above the breakeven point is considered profitable, and below is loss. Breakeven could also be termed in another way as the point where previous investments (on the restaurant) were already covered, and losses are already covered.

How to use these data?

Often when a restaurant’s business hit the breakeven point, it’s a joyful thing. And the earlier the business hits the breakeven point, the better it is. Simply for the fact that this is the time where money is made – All previous investments are covered by profits made (below the breakeven point). As you can see, this Sample Business here took almost 7 months to break even. (1 Quarter = 3 months)

Accounts should always record costs and profits in the restaurant cost sheet. Among documentations that are included with this chart are:

  1. Invoices and receipts.
  2. Expenditure Statements.
  3. Income Statements.
  4. Monthly and Quarterly Report (Information and data length & size varies, respectively)
  5. Risk Analysis & Ongoing Viability Log (Quarterly)

These data can be used to:

  1. Assess pricing structure of the menu
  2. Estimate miscellaneous costing (accidents, staff turnover, bonuses, extra fixed costs)
  3. Assess managerial abilities and skills of the Operations Management team
  4. Understand market trends throughout the whole year
  5. Analyze viability of changes made (if any) to the operations in the restaurant
  6. Speculate next season’s gross profits
  7. Assess investment abilities for expansion, improvement and marketing. (Or more)

These are the primary usage of this data, and will not just be concluded of those five (5) key points stated above. Depending on the Restaurant Manager, he could include additional data like Objective Planning, Estimated Sales after Improvisation, etc.

Restaurant Cost Sheet

The restaurant cost sheet is divided into a few sections:

Restaurant Sales

  • Food Sales
  • Beverage Sales
  • Miscellaneous Sales

Cost of Sales

  • Food Cost
  • Beverage Cost
  • Miscellaneous Cost

GROSS PROFIT

Restaurant Sales – Cost of Sales
= Gross Profit (Positive/Negative)

Operating Costs

  • Labor Costs
  • Variable Utensils, Equipments and Cutleries
  • Gas
  • Laundry
  • Credit Card Fees
  • Operating Supplies
  • Marketing and Advertising
  • Utilities
  • Repairs and Maintenance

[[ TOTAL OPERATING COSTS ]]

Fixed Costs

  • Rent
  • Taxes
  • Insurance
  • Interests
  • Depreciation Value

[[ TOTAL FIXED COSTS ]]

NETT PROFIT

Gross Profit – (Total Operating Costs + Total Fixed Costs)
= NETT PROFIT

Feel free to add into your cost sheet any extra fixed costs, variable costs or whatsoever that you need to. You should always have a column for the first (1st) Quarter and the percentage, next column will be second (2nd) Quarter and the percentage; for easy comparison between Quarters in a year.

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One Response to “Cost Control – The Breakeven Point”


  1. 1 Cost Control - The Breakeven Point : businessuu

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