Prime Cost Calculator
Calculate your restaurant's prime cost — the sum of food costs and labor costs. The single most important profitability metric. Target: 55-65% of total revenue.
Breakdown auto-fills Total Labor Cost above when values change.
What Is Prime Cost in a Restaurant?
Prime cost is the single most important profitability metric in the restaurant industry. It represents the sum of your two largest controllable expenses: cost of goods sold (food and beverage costs) and total labor costs (wages, benefits, and payroll taxes). The formula is straightforward: Prime Cost equals COGS plus Total Labor. Expressed as a percentage of total revenue, prime cost tells you exactly how much of every dollar earned goes toward these two categories. Restaurant operators who track prime cost weekly can catch profitability problems before they spiral out of control, making it the number one metric every owner and manager should monitor.
Ideal Prime Cost Percentage by Restaurant Type
The target prime cost percentage varies by restaurant concept. Fine dining establishments typically run between 60 and 65 percent because of premium ingredients and higher labor for service quality. Casual dining restaurants target 55 to 60 percent. Fast casual concepts, with lower service requirements, aim for 50 to 58 percent. Quick service restaurants achieve 45 to 55 percent through streamlined operations and lower ingredient costs. Regardless of concept, a prime cost above 65 percent signals a serious profitability problem. If your restaurant consistently exceeds this threshold, either food costs, labor costs, or both need immediate attention. The goal is to leave 35 to 45 percent of revenue for rent, utilities, marketing, equipment, and profit.
How to Lower Your Prime Cost
Reducing prime cost requires attacking both components strategically. On the food side, negotiate supplier contracts, implement portion control with standardized recipes, cross-utilize ingredients across menu items to reduce waste, and use first-in-first-out inventory rotation. Menu engineering helps you promote high-margin dishes while phasing out underperformers. On the labor side, optimize scheduling based on actual sales volume rather than guesswork. Cross-train employees so fewer staff can cover multiple positions. Track labor cost as a percentage of revenue each week, not just total hours. Consider your management salary structure and whether benefits packages are competitive but sustainable. Even a one percent reduction in prime cost on a million-dollar annual revenue restaurant saves ten thousand dollars per year, going directly to your bottom line.
Weekly vs Monthly Prime Cost Tracking
Industry best practice is to calculate prime cost weekly rather than waiting for monthly financial statements. Weekly tracking lets you spot cost spikes within days instead of discovering a problem four weeks later. Use this calculator with your weekly revenue, food invoices, and payroll data to stay on top of your numbers. Compare each week against your trailing four-week average to identify trends. A sudden two percent jump in food cost might indicate supplier price increases, theft, or waste issues that need immediate investigation. Consistent weekly tracking is the habit that separates profitable restaurants from those that struggle.