Restaurant Break-Even Calculator — UAE Owner's Guide

A restaurant breaks even when its monthly contribution margin (revenue minus variable costs) equals its monthly fixed costs. For a UAE operator that means anchoring three real numbers — district rent, DEWA tariff, and a UAE-specific salary structure — before dividing by your average check to get daily covers.

Generic break-even calculators assume a US restaurant with tipped wages and 8 percent sales tax. None of that applies in the UAE. Rent is in AED per square foot per year (not per month). There is no minimum wage but there is the Wages Protection System. VAT is 5 percent, not 8. DEWA charges commercial electricity at a flat rate, not by slab. This guide rebuilds the break-even calculation around UAE-specific inputs and ends with a worked example: an 80-seat casual diner in JLT.

The break-even formula in 30 seconds

The textbook formula taught in managerial accounting (SUNY Lumen Learning, Boise State and Penn State's HMD329 Food Production CVP chapter all use the same form) is:

Where contribution margin ratio is the share of every AED of revenue left after variable costs — the share that goes toward paying fixed costs and, beyond break-even, profit:

To convert AED of revenue into a daily operating target, divide by your average check and again by the number of trading days:

The hard part is not the formula. It is plugging in real UAE numbers for fixed and variable costs. The next four sections do exactly that.

Step 1 — List your monthly fixed costs (AED)

Fixed costs are the bills that arrive whether you serve one cover or one thousand. For a UAE restaurant the line items are:

• Rent — quoted as AED per square foot per year; divide by 12 for monthly.
• Base salaries — basic wages of permanent staff paid via WPS, plus the cost-to-employer multiplier for accommodation, transport, medical insurance and end-of-service gratuity accrual.
• Trade licence amortised — annual licence fee spread over 12 months.
• Software, internet, telephony — POS, accounting, delivery integration, internet line.
• Insurance — public liability, fire, workmen's compensation.
• Marketing retainer — agency fee, paid platform minimums.
• Depreciation / lease payments on kitchen equipment and fit-out.

Rent by Dubai district (2025 commercial snapshot)

Use the 2025 Dubai commercial rent snapshot from West Gate Real Estate as a starting band, then verify against current PropertyFinder and Bayut listings for the exact unit. F&B units typically sit at the upper end of these ranges because of ventilation, grease-trap and shopfront requirements.

Base salaries — UAE-specific structure

The UAE has no statutory minimum wage. Federal Decree-Law No. (33) of 2021 — the Labour Law — sets wages by employment contract and requires payment through the Wages Protection System (WPS) within 15 days of the end of the salary period. Gratuity is payable on the last basic wage, capped at two years' wages.

Typical Dubai F&B basic wages (2026 medians, before accommodation and benefits):

The 1.35× multiplier covers shared accommodation (AED 600-1,200 per head/month), transport, medical insurance (DHA-mandated for Dubai-issued visas), gratuity accrual, and the small per-employee WPS bank fee. For luxury concepts with single accommodation and tipped pay-out structures, multiply by 1.5×.

Step 2 — Calculate your variable cost ratio

Variable costs scale with covers. For UAE F&B the components are:

• Cost of goods sold (food + beverage) — typically 28-32 percent of revenue for casual dining, 22-28 percent for QSR, 32-38 percent for fine dining with imported proteins.
• Variable labour — casual / part-time waiters, weekend bartenders, on-call cleaners. Treat as variable if you can flex hours within the week.
• Delivery aggregator commission — Talabat, Deliveroo, Careem and Noon take a percentage of the order value on every transaction. Commission scales 1:1 with revenue, so it belongs here, not in fixed costs.
• Packaging — for delivery / takeaway only. Typically AED 1.50-4.00 per order.
• Card-processing fees — UAE merchant rates run 1.8-2.5 percent on retail F&B.
• Variable utilities — the share of DEWA that scales with covers (extra kitchen-equipment hours, dishwashing water). The rest of DEWA — the 24-hour A/C load — is effectively fixed.

Step 3 — Find your contribution margin

Add up the variable cost percentages from Step 2, then subtract from 100 percent. The result is your contribution margin ratio — the share of each AED that is left over to cover rent, fixed salaries, software, and (eventually) profit.

Half of every AED in revenue is available to cover the fixed bills. That number is the lever for everything that follows.

Step 4 — Worked example: 80-seat JLT casual diner

Concept: 80-seat Mediterranean casual diner on a JLT cluster ground floor. 1,500 sqft total (1,200 sqft FOH + 300 sqft BOH). Average check AED 60. Open 7 days, lunch + dinner.

Monthly fixed costs

Variable cost ratio

Using the 50 percent total variable ratio from the Step 3 walk-through, contribution margin = 50 percent.

Break-even

Step 5 — Convert AED to daily covers (sensitivity)

Run two or three sensitivity cases. The numbers below hold variable cost ratio at 50 percent and trading days at 30, then sweep fixed costs and average check.

The table makes one thing obvious: average check has a leverage effect that no amount of cost-cutting can match. Doubling average check (AED 60 → AED 120) halves the required cover count at every fixed-cost level. Menu engineering and bar attach-rate work directly on the contribution margin numerator — and that is the highest-ROI lever an owner has.

Common mistakes that miss the real break-even

1. Treating delivery commission as fixed. Aggregator commission scales with revenue, not with time. It belongs in variable costs. A restaurant where 40 percent of orders go through aggregators at an average 25 percent commission is giving up 10 percent of revenue before any food cost is touched.
2. Forgetting cost-to-employer. Basic salary is what hits WPS. Real labour cost is basic × 1.3 to 1.5, after accommodation, transport, medical, gratuity accrual and per-employee WPS bank fees. Use the higher number in the break-even.
3. Underestimating DEWA. An 80-seat diner running A/C 24/7 plus a full hot kitchen draws 12,000-18,000 kWh per month at AED 0.46 effective per kWh. That is AED 5,500-8,300 in electricity alone before water, sewerage, and fuel surcharge re-pricing.
4. Using gross VAT-inclusive numbers. VAT is a flow-through, not revenue. Always calculate break-even on the VAT-exclusive (net) line.
5. Ignoring rent-free fit-out periods. A 3-month rent-free on a 36-month lease reduces effective rent by ~8 percent, not 25. Amortise the benefit across the lease term in the break-even, not just in month one.
6. Mixing fixed and variable labour. Full-time salaried staff are fixed. Casual / on-call hourly hours are variable. Lumping both into one bucket inflates fixed costs and overstates break-even by 5-10 percent.
7. Quoting break-even at the gross profit line, not the operating profit line. True break-even includes rent, utilities, marketing, depreciation and licence amortisation. A "kitchen break-even" that only covers food and labour is misleading.

How HoreX surfaces these numbers in real time

The break-even calculation is only useful when it is fed live data. Three modules in HoreX produce the inputs:

• HoreX Finance auto-generates a real-time P&L from POS, supplier invoices, and recipe-based write-offs — revenue, COGS, and expenses by branch and concept, with WAC-based ingredient pricing.
• HoreX Reports & Analytics publishes shift reports with revenue, average check, payment mix, discounts and voids — the average-check input to the break-even calculation.
• HoreX Recipes auto-costs every dish with brutto/netto and loss coefficients, so the food-cost variable feeding contribution margin moves with supplier prices, not with month-end guesses.

For a step-by-step on the food-cost input that drives contribution margin, see our food cost percentage guide. For the compliance permits embedded in the licence amortisation line, see the Dubai Municipality food-safety requirements breakdown.