STUDIO NOIR · Break-Even Analysis
When does the studio pay its own bills, and when does it start putting money in Taj’s pocket.
Break-even = the point where money coming in covers money going out.
Two different break-even numbers
Two different things matter:
- Monthly break-even. The revenue we need every month to cover that month’s operating costs. Below this, we lose money that month.
- Cumulative break-even. The point at which we’ve earned back what we spent to open. Below this, the business is still “in the hole” on the opening investment.
Both matter. We track both.
1. Monthly break-even (Phase 1)
Monthly fixed operating costs at Phase 1 steady state (current capital stack: $84K cash equity + Chase business credit facility undrawn + equipment lease; no landlord TI assumed):
| Cost | Monthly |
|---|---|
| Rent (all-in, no TI amortization) | $4,000 |
| Utilities | $450 |
| Insurance | $550 |
| Booking software | $500 |
| Cleaning | $400 |
| Equipment lease (poles, sound, lighting) | $400 |
| Supplies + marketing baseline + accounting + processing + misc | $600 |
| Fixed costs | $6,900 |
Variable cost (grows with volume): contract instructor pay, roughly $60 per class, roughly 48 classes per month = $2,880/mo.
Total monthly cost at steady class schedule: about $9,780.
To cover this, we need $9,780 in monthly revenue.
At blended member price of $259/mo, that’s $9,780 ÷ $259 = ~38 members to break even monthly. With modest drop-in and private lesson revenue at steady state, effective break-even moves to 35 to 38 members.
At 38 members we clear zero. Every member beyond 38 goes toward Taj’s clean cash.
| Members | Monthly revenue | Monthly costs | Clean cash to Taj |
|---|---|---|---|
| 30 | $7,770 | $9,300 | -$1,530 (loss, Chase LoC bridge or reserve draw) |
| 35 | $9,065 | $9,500 | -$435 (small loss) |
| 38 | $9,842 | $9,780 | +$62 (break-even) |
| 46 | $11,914 | $9,900 | +$2,014 |
| 50 | $12,950 | $9,900 | +$3,050 |
| 60 | $15,540 | $10,000 | +$5,540 |
| 70 | $18,130 | $10,100 | +$8,030 |
| 80 | $20,720 | $10,200 | +$10,520 |
| 100 (Phase 1 stretch) | $25,900 | $10,500 | +$15,400 |
Monthly break-even = 35 to 38 members.
Why 35-38 (vs the earlier 46)
The prior plan modeled landlord TI as baseline, which pushed rent to $5,000/mo (base rent + TI amortization) and break-even to 46 members. The current plan removes TI from the baseline, drops rent to $4,000/mo all-in, and lowers fixed opex from $8,900/mo to $6,900/mo. Break-even drops to 35-38 members, roughly 8 fewer members and 2-3 months of ramp difference in the right direction.
Trade-offs of moving to this stack: - Buildout scope now underwritten entirely by Taj’s cash + equipment lease. The Chase business credit facility (~$75K undrawn) is the bridge if overruns hit; the reserve stays untouched. - Slightly smaller footprint (1,500-1,800 sqft) biased to second-generation retail (already fit for wellness or similar tenant). - Any landlord TI we negotiate is upside on top of this baseline: freed cash goes to reserve refill or scope upgrade.
Recommended trade. Lower break-even + lower monthly rent + credit facility discipline beats TI-amortized-in-rent.
2. Cumulative break-even (payback on Taj’s $84K)
Once monthly cash flow is positive, how long until Taj’s original $84K is fully returned to her through distributions?
Assumptions: - Reserve is refilled to $32K first (roughly month 5-7 based on cash flow forecast, faster than the prior plan because break-even is lower). - Any drawn Chase LoC or Ink balance is paid down to $0 next (roughly month 7-9 in the base case, where the LoC was undrawn or lightly drawn). - Distributions start after both are complete (roughly month 10-11). - Distributions run at $4K/mo starting month 11, ramping to $9K/mo by month 24.
Cumulative distributions:
| Month | Cumulative distribution to Taj |
|---|---|
| 10 | $0 (reserve refilling + any credit pay-down) |
| 12 | $8,000 |
| 15 | $22,000 |
| 18 | $42,000 |
| 21 | $63,000 |
| 23-24 (approx) | $84,000 fully returned |
| 30 | $130,000 |
| 36 | $180,000 |
Cumulative break-even: about month 23-24 (roughly two years after opening).
Everything Taj receives after month 24 is profit on her original $84K.
The current stack pulls cumulative break-even in by 2-3 months vs the prior TI-baseline plan because monthly clean cash to Taj runs $1,000-$2,000 higher at every member count (rent is $1,000/mo lower).
3. Sensitivity: how the numbers move
If any of these change, break-even moves:
| Change | Monthly break-even effect | Cumulative break-even effect |
|---|---|---|
| Rent goes up $500/mo (bigger space or weaker negotiation) | +2 members | +2 to 3 months |
| Member churn goes up from 4% to 6% | +8 members | +6 to 9 months |
| Blended member price drops to $229 (Access-heavy mix) | +5 members | +3 to 5 months |
| Class schedule expands (extra $1,000/mo instructor cost) | +4 members | +2 to 3 months |
| Merch and events add $800/mo revenue | -3 members | -2 to 3 months |
| Waitlist converts at 30% instead of 20% | Faster ramp, break-even at month 3-4 | -3 to 4 months |
| Landlord TI negotiated (upside): $10K TI redirected to reserve refill | Neutral to break-even, but reserve refill is faster | -1 to 2 months |
| Chase LoC drawn $20K to bridge buildout overrun | Neutral to break-even; interest $70-100/mo until paid down | -1 to 2 months on payback (interest cost + delayed distributions) |
| Equipment lease PG denied, buyer pays $11K cash instead | Break-even drops slightly (no $400/mo lease line), but cash reserve shrinks | Neutral to slightly worse |
4. The “how low can we go” floor
If everything went wrong, what’s the minimum we could survive at?
- 25 members at $259 blended = $6,475/mo revenue
- Cut instructor schedule to 3 classes per week instead of 12 (from $2,880/mo to $720/mo instructor cost)
- Cut supplies and marketing to bare minimum ($200 to $400/mo)
- Reduced monthly cost: about $7,620 (rent + insurance + lease + skeleton opex + minimum instructor)
At 25 members with a stripped-down schedule, we lose about $1,145/mo. That’s the survival floor. Reserve + Chase LoC together buy about 8-10 months at that burn, meaning wind-down conversation is a month 8-10 problem if things stay bottom.
Floor: 30 members. Below this, the model does not work at Phase 1 spec with the current stack. Rent and equipment lease are the two lines that anchor the floor. If we hit floor and stay there past month 8-10, Taj’s personal capital backstop is the only remaining lever before wind-down.
5. What accelerates break-even
Fastest levers, in order of impact:
- Aggressive pre-launch waitlist. Every 20 extra members at open means 3 months less to cumulative break-even.
- Referral program. Existing member gets 1 free month per 2 referrals. Cheapest new-member acquisition.
- Drop-ins from month 3. Adds $700 to $1,400/mo of near-pure margin.
- Private lessons. $1,000+/mo, high margin.
- Corporate wellness soft outreach. Even a small pilot ($3K/mo per account) accelerates.
- Any TI negotiated is pure upside. If the landlord offers TI in the signed lease, the corresponding buildout cash gets redirected to reserve refill or scope upgrade, and the Chase credit facility comes off the burn faster. Not baseline; not required.
6. Phase 2 break-even preview (rough only, rebuilt in 2028)
Phase 2 flagship has much higher fixed costs (bigger space, GM salary, more staff, higher insurance, broadcast production overhead). Rough monthly fixed cost at flagship steady state: $85K to $110K.
At blended $450 member price, that’s 189 to 244 members to break even monthly. Target Phase 2 open with 200 committed members to break even from month 1.
Phase 2 cumulative break-even (payback on the ~$4M raise) is a 5 to 7 year horizon at base case, faster with THE NOIR INVITATIONAL and Phase 3 franchise royalties layered in.
Full Phase 2 break-even model rebuilt in 2028 against real Phase 1 numbers and real Phase 2 build costs.