Break-Even Point Part 2: Analysis

In the first part of our break-even point article duet we explained how to calculate your break-even point and the different ways, monetarily and through guest count, in which this data can be expressed and understood. Your break-even point is often used as a forecasting figure, and this is where it is very beneficial to your business. Here we discuss using your break-even calculations to look backwards and forwards in order to assess and improve your business’s financial analysis.

Let’s say you’re thinking about having some new insulation and smart thermostats installed in your venue. You have the amount of money that you’re going to save on hand, but is it worth it? If you use these numbers to calculate your new break-even point you’ll find out how much quicker you’ll be reaching your breakeven point, and, therefore, how much more profit you’ll be making, as well as how quickly your new building upgrade will pay itself off and actually begin saving you money. This can be done with all sorts of upgrades which affect your fixed costs and allows you to keenly assess the benefits of the investment you’re considering.

Using Guest Count for Break-Even Analysis

Calculating your break-even point for guest count rather than dollar amount puts the information into a tangible quantity that you can see and aim for. It is also something which you can tally up in real-time as the period of business you’re analysing progresses.

Guest count break-even analysis can help you view the best way to increase your profitability. If, lets say, your guest count is already very high, you’re business is very busy but you’re just not getting to your break-even point in a comfortable amount of time, you’re going to want to increase your check average, either by training upselling into your employees sales tactics or by increasing select menu prices.

Conversely, what if the guest count figure coming out of your break-even analysis doesn’t seem to be a plausible target for your business? Maybe increasing prices is a good idea however you may feel that you want to decrease your costs passing on that cost to your guest. Playing with your variable costs can allow you to see how much you will want to try and save in order to bring your break-even point to a level you find reachable, without passing that cost onto your guest.