A coffee shop's break-even point is the number of drinks a day that pays all your fixed costs, including your own pay. The sum: monthly fixed costs ÷ days open = fixed cost per day; then divide that by what an average drink leaves you, plus what the food sold alongside it leaves. With the numbers in the example below, a small café needs 77 drinks a day to stop losing money; without food sales it would need 93.
Step 1: your fixed costs per day
Fixed costs are the ones you pay even if you sell no coffee at all. If you are unsure what belongs here, the guide to fixed versus variable costs explains with examples.
- Rent
- Your barista's wages, including what you pay on top of the wage
- Your own pay, what you need to live on (the guide to paying yourself covers how to set it)
- Power, water, gas, internet
- Accountant and till software
- Espresso machine and grinder lease or maintenance
- Insurance, cleaning, regular repairs
Add them up and divide by the days you open each month. That is what you need to bring in every day before you make anything.
Step 2: the contribution of an average drink
Contribution is the price before tax minus the variable cost of the drink: coffee, milk, cup, lid, sugar, stirrer. How to work out that cost is in the guide to the cost of a cup of coffee.
Drinks do not all leave the same, so you need a weighted average: each drink's contribution multiplied by its share of your sales. Take the shares from your till report, or tally a week of sales by hand.
Step 3: the food that goes with the coffee
Plenty of customers add something to eat: a pastry, a muffin, a toastie. Count over a week how many tickets in every 10 include food and what that food leaves on average. That extra contribution, spread across all your coffees, lowers the number of cups you need.
Step 4: the break-even point
Drinks per day = fixed cost per day ÷ (contribution per drink + food contribution per drink)
Always round up; nobody sells a fraction of a latte.
Worked example: a small café
Monthly fixed costs
| Cost | Amount |
|---|---|
| Rent | $3,200 |
| Barista (including costs on top of wages) | $2,600 |
| Your pay | $3,000 |
| Power, water, gas and internet | $450 |
| Machine lease and maintenance | $300 |
| Accountant and software | $250 |
| Insurance and other | $200 |
| Total | $10,000 |
You open 30 days a month: 10,000 ÷ 30 = $333.33 a day.
Drinks (prices before tax)
| Drink | Price | Variable cost | Contribution | Share of sales |
|---|---|---|---|---|
| Drip or americano | $3.50 | $0.70 | $2.80 | 30% |
| Latte or cappuccino | $5.00 | $1.20 | $3.80 | 50% |
| Iced or blended | $6.00 | $1.60 | $4.40 | 20% |
Average contribution per drink: 0.30 × 2.80 + 0.50 × 3.80 + 0.20 × 4.40 = 0.84 + 1.90 + 0.88 = $3.62
Drinks only: 333.33 ÷ 3.62 = 92.1, so 93 drinks a day.
With food: you counted that 3 tickets in 10 include food, and food leaves $2.50 on average (sold at $4.00, costing you $1.50). Per drink: 0.30 × 2.50 = $0.75.
- Contribution per drink with food: 3.62 + 0.75 = $4.37
- Break-even: 333.33 ÷ 4.37 = 76.3, so 77 drinks a day
Open 11 hours and that is 7 drinks an hour. That is the number to check against your till at lunchtime to know whether the day is on track.
What moves the number
With the same data, each lever does this:
| Change | New sum | Drinks a day |
|---|---|---|
| Starting point | 333.33 ÷ 4.37 | 77 |
| Latte up $0.50 (half your sales) | 333.33 ÷ 4.62 | 73 |
| Rent up $500 a month | 350.00 ÷ 4.37 | 81 |
| 4 tickets in 10 include food | 333.33 ÷ 4.62 | 73 |
| No food sold | 333.33 ÷ 3.62 | 93 |
Fifty cents on the latte, or one more food sale in every ten tickets, takes 4 drinks a day off the target. Another $500 of rent adds 4. The break-even in units per month and per day tool runs these sums so you can try your own changes.
What the number does not tell you
- It is a floor, not a goal. At break-even you make nothing beyond your pay. Profit starts at drink 78.
- Days are not equal. Compare with the weekly average, not with Monday.
- A different mix means a different number. Sell more iced drinks in summer and your average contribution rises; sell more drip coffee and it falls.
- Card fees count. If most customers pay by card, take the fee off each drink's contribution.
The general guide to break-even covers the method for any food business, and the guide to drink costs covers the cost of everything you sell over the counter.
Do it with the calculator
In the food cost calculator, enter each drink with its recipe and packaging to get its exact variable cost; with that contribution and your monthly fixed costs you know how many drinks a day you need.
Frequently asked questions
Does my own pay count as a fixed cost?
Yes. Leave it out and the break-even point tells you how many cups you need to work for free. Put in the pay you need to live on and treat it like rent.
Should I use menu prices with or without tax?
Without. Sales tax is collected for the government, so work out contribution on the price before tax. Check your local tax rules for how food and drinks are taxed where you are.
What if every day is different?
Compare the daily break-even with the average over a full week, not with one day. If Mondays are slow and Saturdays are busy, what matters is that the week gets there.
How can I lower my break-even point?
There are three levers: cut fixed costs, raise contribution per drink through price or cost, or sell more food with each coffee. Work out how many cups a day each one moves before choosing.