Is this break even formula true for you?

[sld]

"I saw a figure in this month's Fresh Cup magazine that blew my mind. An article claimed that the break-even point can be formulated as monthly sales equal to ten times your rent. TEN TIMES? I boggled. I just KNEW it couldn't be true. But when I sat down and did the math on a fully staffed operation of The Black Drop, damn if it wasn't exactly that. The biggest expense, hands down, was salary." I copied this from coffee geek. Our rent will be $2,500 a month which means we would need $25,000 a month to break even. We were thinking we could break even on half this amount. We will be working so I know this will make a difference, I would like to know other coffee shop owners experience with these numbers. Thanks

 

[BeanGrinder]

Dude - that's a lot of coffee! But I would suggest you look at a place with cheaper rent!!! Unless, of course, you are going into a really high traffic area and think you'll sell MORE than 25,000 in coffee...because you want to make a profit, not just break even.

 

[GeorgeW]

Better not be

I hope that estimate isn't correct, otherwise my wife and I are going to go broke when we open up our shop.

10X monthly rent? Our rent is $1500...that would be 15,000 in sales per month. At a very, very rough estimate $2.83 cost per drink sold, I'd need 176 drink sales per day to reach that 15k monthly sales goal.

Maybe my estimates are completly whacked, but I'm planning on making about 40k profit at that sales lvl.

Break even to my estimates is about - 75 drinks a day - or about half what you read. I hope I'm right and they are wrong! :?

 

[mikefly]

ive been in food service for about 13 years and we just opened our shop our rent is alot lower than most but we added pannini to help get the average ticket price up!!!! you can help your self by keeping your food cost(coffeecost)labor cost and operation cost down to help your gross profit.... try to keep food cost at around 20% labor cost at 18% and operating at about 40% so if you have 3 employes at $6.00 an hour and you sell $100 in one hour you as the owner are left with $12.00 for that hour... its pretty much the same formula that applebees tgi fridays etc(corprate bullies)use... so just remember you can always keep your labor cost down by working the place your self as much as you can keep your light bill and gas bill under control and if you can make it 3 months you can make it forever