The seven numbers
| # | Number | How to calculate | Red flag threshold |
|---|---|---|---|
| 1 | Monthly break-even revenue | Fixed costs ÷ contribution margin % | >1.8× expected month-3 revenue |
| 2 | Daily break-even covers | Daily break-even ₹ ÷ AOV | >85% of peak-hour capacity |
| 3 | Rent load | Monthly rent ÷ expected revenue | >12% for casual dining |
| 4 | Prime cost at target volume | Food % + labour % at month-6 covers | >58% for casual dining |
| 5 | Capex payback period | Total capex ÷ monthly net profit at steady state | >36 months |
| 6 | Aggregator dependency | Aggregator revenue ÷ total revenue (projected) | >45% without dine-in plan |
| 7 | Working capital runway | Cash available ÷ monthly fixed cost | <2.5 months |
Number 1: monthly break-even revenue
Add rent, salaries, utilities, EMI, insurance. Divide by contribution margin (1 minus variable cost rate). If break-even is ₹6L and you realistically expect ₹4L in month 3, you need 18+ months of subsidy — or a different site.
Number 2: daily break-even covers
Divide daily break-even revenue by your expected AOV. If you need 120 covers/day and your peak-hour kitchen capacity is 100, you have a structural problem. Casual dining at 60 seats typically caps at 180-220 covers/day across lunch and dinner.
Number 3: rent load
Number 4: prime cost at target volume
Model food cost and labour cost at month-6 covers, not opening week. Labour cost % is higher at low volume. A roster that works at ₹8L revenue may show 62% prime cost at ₹4L — and that is your reality for the first 4-6 months.
Number 5: capex payback
Total capex (equipment + interiors + deposit + licences + working capital) divided by projected monthly net profit at steady state. Under 24 months is strong. 24-36 months is acceptable for prime locations. Above 36 months means you are buying a job, not a business.
Numbers 6 and 7: aggregator dependency and cash runway
If your location plan relies on aggregator for >45% of revenue, model commission (24-28%), packaging (8-9%), and refunds (2-3%) into variable cost rate. Cloud kitchen formats can sustain this; dine-in restaurants cannot without a dine-in volume plan. Working capital below 2.5 months of fixed costs means you will borrow at 24-30% in month 3 — budget for it or increase opening capital.
When to walk away
- Any two red flags from the table above — one is negotiable; two is structural.
- Rent load >15% — almost never works without an existing brand pulling covers from day one.
- Break-even covers > kitchen capacity — maths doesn't lie; the site can't support the format.
- Capex payback >48 months — you are paying for the landlord's location premium, not your concept.