THE VAULT · Break-Even Analysis
Last updated: 2026-07-28 Status: Planning
Overview
Three break-even metrics matter here: EBITDA break-even (operations), cash flow break-even (reserve stabilization), and investment payback (return of capital). All three are calculated below using the Charlotte cost basis and the base case fixed cost structure.
1. Monthly EBITDA Break-Even
Monthly fixed opex in Year 1 averages approximately $288,000.
EBITDA break-even = Fixed Opex / Gross Margin %
| Gross Margin Assumption | Fixed Opex | Break-Even Revenue |
|---|---|---|
| 60% | $288,000 | $480,000/mo |
| 62% (base) | $288,000 | $464,516/mo |
| 65% | $288,000 | $443,077/mo |
Base case monthly break-even revenue: $464,516
2. Member Count at Break-Even
At a blended monthly membership rate of $475 and membership revenue comprising approximately 62% of total revenue:
Monthly membership revenue at break-even = 62% x $464,516 = $288,000 Members required: $288,000 / $475 = 607 members
That is the membership-only view. In reality, ancillary revenue reduces the member count required. Backing into it with the full blended revenue model:
| Scenario | Members | Ancillary Monthly Rev | Total Monthly Rev | vs Break-Even |
|---|---|---|---|---|
| Bear | 400 | $100,000 | $290,000 | ($174,516) |
| Near break-even | 475 | $125,000 | $350,625 | ($113,891) |
| EBITDA neutral | 560 | $145,000 | $411,000 | ($53,516) |
| EBITDA positive | 620 | $160,000 | $454,500 | ($10,016) |
| Clean break-even | 650 | $165,000 | $473,750 | $9,234 |
| Target mature | 800 | $200,000 | $580,000 | $115,484 |
EBITDA break-even = 650 members, assuming ancillary revenue per member at mature rate
At the base ramp curve, 650 members is reached approximately Month 11-12. This is consistent with the 3yr model showing EBITDA crossover at Month 9 (EBITDA-positive but thin) and solid EBITDA at Month 12.
3. Revenue Mix at Break-Even
At 650 members and blended $475/month:
| Revenue Line | Monthly Amount | % of Total |
|---|---|---|
| Membership | $308,750 | 65% |
| Personal Training | $21,000 | 4% |
| Private Studios | $25,000 | 5% |
| Class Drop-In | $20,000 | 4% |
| Corporate Wellness | $12,000 | 3% |
| Retail | $40,000 | 8% |
| Digital Membership | $5,000 | 1% |
| Café | $15,000 | 3% |
| Vault Invitational (monthly avg) | $5,000 | 1% |
| Other | $21,000 | 4% |
| Total | $472,750 | 100% |
This mix implies the business does not depend on any single ancillary line to reach break-even. Membership is the load-bearing beam. Everything else accelerates toward profitability.
4. Cash Flow Break-Even (Reserve Stabilization)
Cash flow break-even is the month when monthly net cash flow turns positive AND the reserve stops declining.
Based on the cashflow forecast: - Reserve stops declining at Month 9 (near-zero net cash flow) - Reserve begins growing at Month 10 - Reserve is stabilized (no longer at risk) by Month 12-13
Cash flow break-even point: Month 10 (first month of consistent positive net cash)
5. Investment Payback
Total equity invested (cash only, excluding TI and SBA debt): approximately $3,000,000
Annual cash-on-cash return from distributions (Y3+): target $500,000 to $1,000,000/yr
| Scenario | Annual Cash Distribution (Y3+) | Equity Payback Period |
|---|---|---|
| Bear (EBITDA $1.6M; dist. 30%) | $480,000 | 6.25 years from open |
| Base (EBITDA $2.98M; dist. 35%) | $1,043,000 | 2.9 years from open |
| Bull (EBITDA $3.6M; dist. 40%) | $1,440,000 | 2.1 years from open |
Base case payback of 2.9 years from open (approximately 3 years total including buildout) is consistent with a premium fitness business at this scale.
6. Break-Even Sensitivity Table
How changes in key variables shift the break-even member count:
| Variable | Change | Break-Even Members |
|---|---|---|
| Base case | None | 650 |
| Rent increases 10% | +$67,500/yr | 670 |
| Labor costs increase 10% | +$91,440/yr | 685 |
| Gross margin drops to 58% | (4 pts) | 700 |
| Ancillary revenue declines 20% | ($33,000/mo) | 730 |
| All negative factors combined | Multiple | 810 |
The all-negative combined scenario (810 members) pushes break-even past the Y3 mature state target of 800 members. This is the stress case that would require either cost cuts or a second capital raise. It is avoidable with discipline on hiring pace and rent negotiation.
7. Founding Member Pre-Sale Impact
If the pre-sale closes 100 founding members at discounted pricing before open day:
| Metric | Without Pre-Sale | With 100 Founding Members |
|---|---|---|
| MRR at open (M1) | $0 | $32,000 (avg $320 discounted) |
| Y1 membership revenue increase | $0 | $192,000 |
| Break-even month (EBITDA) | M9 | M8 |
| Cash reserve at M12 | $1,056,440 | $1,248,440 |
Pre-sale moves break-even forward by approximately one month and adds nearly $200K of Y1 revenue. It is worth prioritizing aggressively.
8. Minimum Viable Floor
The minimum scenario where the business survives without a capital injection:
- 500 members generating $237,500 MRR
- Ancillary revenue: $135,000/month
- Total monthly revenue: $372,500
- Fixed opex held at $270,000 (lean team, no new hires)
- Debt service: $16,500
- Net cash flow: $86,000/month (positive but thin)
500 members is the survival floor. Below this level with current cost structure, the reserve depletes and outside intervention is required. The 500-member floor must be treated as a hard trigger for cost controls, not a target.