How to Calculate Coffee Shop Break-Even Points (BEP)

Want to start running a Coffee Shop business ? Maybe a lot of things you need to think about and prepare before you start to open a Coffee Shop or coffee shop. One of the most important things you should know is to project how much sales and costs you can get to Break-Even Point (BEP) .

It’s normal to experience a loss when you open a business. But when the business reaches BEP, it means that your coffee shop has no loss. BEP is the point where your business sales successfully cover all the costs and initial capital you invest.

By knowing the BEP numbers, you will get an idea of ​​your coffee shop business budgeting . Like the size of the place needed, the number of coffee machines needed and the number of staff needed to operate the coffee shop. Here are the steps to calculate and get a BEP value for your coffee shop business.

Find Out Net Projection Projection

Projecting or predicting your total income is one component in knowing the value of BEP. You can project your total income on a daily, weekly, monthly or even annual basis. Generally, a measure of income needed on a monthly basis. BEP calculation also needs to be planned from the beginning to build a business. This is one of the important points that occur in the company.

Fixed Costs, Variable Costs and Semi-Variable Costs

How much does it cost to keep your coffee shop operating? How much does it cost to make one cup of coffee? These costs are very important to know. Not only is it a component of BEP calculation, it can also be a consideration tool for your business decisions. You can also make a budget effectively by knowing what costs will occur while your coffee shop operates.

·         Fixed costs ( F ixed Cost )

Costs that you must incur whether your shop does or does not do sales activities. Examples of fixed costs are electricity, internet, building rent and other similar costs. Some staff whose salary values ​​can be predicted to remain in accordance with work agreements are also included in the fixed cost calculation . Other staff such as cashiers, managers, cooks, including cleaning service , are also counted as fixed costs . But for staff employed because of increased business needs, technically it does not count as a fixed cost.

·         Variable Cost ( Variable Cost )

Costs directly related to sales. Cost of COGS (Cost of Goods Sold) is one of the most crucial and significant examples of variable costs in determining the value of a coffee shop BEP. Speaking of COGS, this means including counting the initial inventory, purchasing raw materials to the final inventory of your coffee shop. Variable costs are costs that can be controlled. Prices of spices and expensive ingredients can still be purchased, the portion of the serving can be changed and some workers can be reduced by hours of work with some consideration. For a basic calculation, in general variable costs only count around food.

·         Semi-variable costs ( Semi-Variable Cost )

Workers’ wages are sometimes included in the semi-variable cost group because some are fixed and some are not. In most cases, workers’ salaries can be controlled by determining how many employees are in one shift, as well as how many hours employees have to work in one shift.

After knowing the projected income and total fixed + variable costs, you only need to know the value of your initial capital deposit. The initial capital deposit can come from personal money, debt or investment from investors. You use this capital deposit to buy assets and finance all your coffee shop costs.

Calculates the BEP Value of a Coffee Shop

By knowing all the components mentioned earlier, you are ready to calculate the value of your business’s BEP. The BEP value formulation is:

BEP = Initial Capital Deposit / Total Net Profit Before Interest and Taxes

Net Income Before Interest and Tax = Total Net Income – Total Costs

For example, Jawari coffee shop predicts that its coffee shop will print an average income of Rp1,200,000 per day. If calculated, for one month Jawari coffee shop might be able to print an income figure of Rp1,200,000 x 12 = Rp14,400,000.

After being calculated, the total Fixed Cost of Jawari coffee shop for one month is IDR 5,000,000 and the Variable Costs are IDR 3,500,000 so that the Total Cost is IDR 5,000,000 + IDR 3,500,000 = IDR 8,500,000. While the Initial Capital Deposit of Jawari coffee shop is Rp150,000,000

If included in the formulation, the BEP value for Jawari coffee shop on a monthly basis is:

BEP = Rp150,000,000 / (Rp14,400,000 – Rp8,500,000)

BEP = 25.4 months

In fact, Jawari coffee shop can only reach the BEP point after about 25 months. This is followed by the assumption of the average value of income and costs mentioned above. But in practice, it is clear that revenues and costs incurred during the period will change. Make sure the projected value of income and costs you use is a minimum benchmark so that if your coffee shop can print more net income and can keep costs incurred, you can reach the BEP point faster.

Conclusion

By recognizing the value of the BEP, at least you have a benchmark to start budgeting and preparing b usiness plan coffee shop you. Break even points will at least help you be more selective about the business you want to start. Of course it also helps careful planning because if a company has reached BEP, then it is very easy to develop a business or invest even more.

 

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