Retrenchment for Jamie's Italian as Restaurants Fall Below Breakeven Output

Higher variable costs and lower customer numbers have forced Jamie's Italian to announce the closure of six restaurants in the UK.

This article in the Guardian is packed with A Level Business gold. It provides a great example of where failing to trade at a breakeven output has forced the closure of several of Jamie's Italian restaurants.

The CEO explains that:

"a combination of high costs on ingredients, staff training and lower footfall had forced the restaurant closures".

Further on we learn that:

Jamie's Italian needs "restaurants that can serve an average of 3,000 covers every week to be sustainable".

In the restaurant industry, the term "cover" refers to a diner who eats or a meal that is served.

So, if we assume that operating sustainably is referring to not operating at a loss, the breakeven output for a Jamie's Italian restaurant is 3,000 covers per week or roughly 400-600 per day.

The restaurant trade is a notoriously tough market in which to operate and there will be many more closures this year as well new openings.

For Jamie's Italian, we learn that the investment focus has shifted away from the UK towards expanding the brand internationally.