Divide fixed costs by contribution margin, and on ABS 2024-25 figures Australian food and beverage services ran expenses at 94.4% of sales, which puts the sector's break even at roughly 89% of the trade it is already doing.
Skai Solutions answers the phone for restaurants, cafes and takeaways in Australia and New Zealand, and the number operators most often cannot find is this one. Every page that ranks for it belongs to a global point-of-sale vendor running the same United States formula with no local figures in it. This page uses the ABS release of 18 September 2026 instead, which is the only national cost structure published for Australian food and beverage services, and turns it into a covers-per-day number you can count rather than a percentage you cannot.
About 89% of what you are selling now, on the only national figures that exist.
The Australian Bureau of Statistics' Australian Industry release of 18 September 2026 reports food and beverage services, which is cafes, restaurants, takeaway and catering, with A$134,077m of sales and service income against A$126,595m of total expenses in 2024-25. Expenses are therefore 94.4% of sales. Operating profit before tax was A$8,917m, a 6.65% margin. Those two ratios are Skai Solutions' arithmetic on the ABS's published dollar figures, not ABS statistics.
Inside that 94.4% the ABS publishes the split: purchases of goods and materials 35.4% of sales, total labour costs 30.4%, which leaves 28.6% for everything else. That 28.6% is the number almost nobody looks at, and it is the one break even turns on, because rent, power, insurance, licences and the finance on your equipment arrive whether you sell anything or not.
Three inputs and one division. The whole thing fits on the back of a docket.
The step people get wrong is step one, by treating all labour as fixed or all of it as variable. Neither is true in a restaurant. Our pages on restaurant food cost percentage and restaurant labour cost percentage have the AU benchmarks for each, and restaurant prime cost covers the two together, which is the single most useful control number in the business.
Take a venue doing A$900,000 a year and give it the sector's own cost shape. Every input here is on the page so you can swap your own in.
| Line | Share of sales | On A$900,000 | Treated as |
|---|---|---|---|
| Purchases of goods and materials | 35.4% | A$318,600 | Variable |
| Labour, variable half | 15.2% | A$136,800 | Variable |
| Labour, fixed half | 15.2% | A$136,800 | Fixed |
| Everything else | 28.6% | A$257,400 | Fixed |
| Contribution margin | 49.4% | A$444,600 | |
| Fixed costs | 43.8% | A$394,200 |
Break even sales are A$394,200 divided by 0.494, which is about A$798,000. The venue is selling A$900,000, so it breaks even at 88.7% of its actual trade and keeps the margin on the last 11.3%. Splitting labour half fixed and half variable is our assumption, not an ABS finding, and it is the input most worth replacing with your own roster.
Turn that into something you can count on a Friday. At an average spend of A$55 a head, which our page on average spend per head puts in context, A$798,000 is 14,509 covers a year. Across 52 weeks that is 279 covers a week, or about 40 a day trading seven days. That is the real answer to the question. Not a percentage, a number of people through the door before you earn anything.
Because the national average hides the one thing that moves break even most, which is your size. The ATO's small business benchmarks, drawn from 2023-24 lodged returns, put average cost of sales for a restaurant at 35% with labour between 18% and 30% in the A$65k to A$500k turnover band, rising to 34% and 27% to 34% above A$2m. Adding them gives a derived prime cost of 53% to 65% at the bottom and 61% to 68% at the top, and that addition is ours rather than an ATO figure.
Prime cost rising with turnover is counter-intuitive and it is the most useful thing in the ATO data. The labour floor climbs from 18% to 27% while cost of sales barely moves, because an owner-operator's own hours are not in the wage line and a A$3m venue's are. So a small venue's break even looks flattering on paper and is not, and growth does not automatically buy you room. Our page on restaurant profit margin in Australia has the margin side of the same question.
Then you have four levers and they are not equally good. In order of how fast they work:
Worth knowing what the consequence of getting none of them right looks like. On the ABS Counts of Australian Businesses data, 110,368 accommodation and food services businesses were operating in June 2022 and 59,294 of them, 53.7%, were still trading in June 2026. Our page on restaurant failure rate in Australia handles that number honestly, including why an exit is not always a failure.
Everything, because break even is a covers number and the phone is where covers are won or lost before anyone walks in.
Work it on the example above. The venue needs 279 covers a week. If a table of four books by phone at A$55 a head that is A$220 of sales and about A$109 of contribution, so roughly 0.8% of a week's break-even requirement rides on one answered call. Miss four of those calls a week and you have given away about A$1,760 of sales a week, which is A$870 of contribution, against fixed costs that did not move at all.
That is Skai Solutions' own arithmetic on the inputs shown here, not a measurement of your venue, and you should substitute your own average spend and party size. The point is structural rather than promotional: once fixed costs are set, every marginal booking is worth its contribution margin and not its revenue, which is why an unanswered phone is expensive in a way a quiet dining room is not. If your phone mostly carries enquiries rather than bookings or orders, a basic message-taking plan is the right buy and it is not us.
How do you calculate a restaurant break even point?
Divide your fixed costs for the period by your contribution margin. Contribution margin is one minus every cost that moves with a sale, divided by sales. The step most people get wrong is labour, which in a restaurant is part fixed and part variable rather than all of one.
What is a typical break even point for an Australian restaurant?
On the ABS Australian Industry release of 18 September 2026, food and beverage services ran total expenses at 94.4% of sales in 2024-25. Splitting that into purchases 35.4%, labour 30.4% and a 28.6% remainder, and holding half the labour fixed, puts break even at about 89% of actual sales. That is Skai Solutions' arithmetic on published ABS dollar figures, not an ABS statistic.
How many covers do I need to break even?
Divide your break-even sales by your average spend per head. On the worked example here, break-even sales of A$798,000 at A$55 a head is 14,509 covers a year, about 279 a week or 40 a day trading seven days.
Is labour a fixed or a variable cost in a restaurant?
Both, which is why break-even sums go wrong. Salaried kitchen staff and the owner are there whatever Tuesday looks like. Casual floor hours move with the roster. Treating all labour as variable understates your fixed costs and makes break even look lower than it is.
Why does prime cost rise as a restaurant gets bigger?
Because the labour floor climbs while cost of sales barely moves. The ATO's small business benchmarks from 2023-24 lodged returns show restaurant labour at 18% to 30% of turnover in the A$65k to A$500k band and 27% to 34% above A$2m, with cost of sales going 35% to 34%. An owner-operator's own hours are not in the wage line, so a small venue's figures flatter it.
What is the fastest way to lower a break even point?
Price, then mix. A 5% price rise on a 49.4% contribution margin adds about 2.5 points of margin on the same covers and takes effect immediately. Reducing fixed costs is more permanent but moves at the speed of lease and insurance renewals, and chasing more covers is the slowest because it depends on demand you do not control.