Prime Cost Calculator
Prime cost is food cost plus labor cost — the two biggest controllable expenses in any restaurant. Enter your numbers below.
What is prime cost?
Prime cost combines your cost of goods sold and your total labor cost, then expresses the total as a percentage of sales. It's considered the single most important number in restaurant finance because food and labor together typically make up 60-70% of every dollar you take in.
What's a good prime cost percentage?
Most full-service restaurants aim for 60-65%, quick-service often targets closer to 55-60%, and anything above 70% usually signals a cost or pricing problem that needs attention. Unlike food cost or labor cost alone, prime cost gives you room to balance the two — a slightly higher labor cost is fine if food cost is well controlled, and vice versa.
Prime cost benchmarks by concept
| Concept | Target Prime Cost |
|---|---|
| Quick-service / fast casual | 55–60% |
| Full-service / casual dining | 60–65% |
| Fine dining | 63–68% |
| Danger zone (any concept) | 70%+ persistently |
How to interpret your result
Under 60% (full service): Excellent controllable margin. Make sure it's not coming from under-staffing that hurts service or portions that disappoint guests.
60–65%: The healthy zone for most table-service restaurants. Your job is stability — track weekly and investigate any 2-point move.
65–70%: Margin pressure. Diagnose by component: if food is the culprit, audit waste, portions, and supplier prices. If labor, compare schedules against actual sales curves and check overtime.
Above 70%: At this level less than 30% of sales remains for rent, utilities, marketing, and profit — unsustainable for most concepts. This usually needs both cost action and menu re-pricing, not one or the other.
What to include in each input
Food & beverage cost: True COGS — opening inventory + purchases − closing inventory — not just what you bought. Include beverage cost here for total prime cost.
Labor cost: Everything your team costs: salaries, hourly wages, overtime, payroll taxes, and benefits. The most common mistake is counting only wages — taxes and benefits typically add 10–20% on top. See the full breakdown in our labor cost formula guide.
How to reduce prime cost
Because prime cost is two numbers combined, there are two independent levers — and the right one depends entirely on which component is driving the problem. Diagnose before you act, because the wrong intervention makes things worse.
If food cost is the driver
- Compare theoretical against actual food cost. Multiply each dish's plate cost by units sold to get what food cost should have been. The gap is waste, over-portioning, and loss quantified. Anything over two points is worth chasing.
- Audit your top 10 ingredients by spend. They typically represent most of your purchasing, so a 5% supplier increase there matters far more than anywhere else on the list.
- Check portion discipline. Scales on the line and standardised serving equipment recover more margin than almost any other single intervention.
- Re-cost recipes that have not been touched in a year. Use the recipe costing calculator and apply real yield percentages — the trim loss on proteins is where costings most often understate reality.
If labor cost is the driver
- Attack overtime first. Those hours cost 50% more, so removing them reduces cost without reducing coverage.
- Match shift times to the demand curve rather than to habit. Most operations pay several staff to wait for the first table.
- Separate fixed from variable labor. If variable labor per cover is flat but the percentage rose, you had a sales problem, and cutting shifts will damage service without fixing anything.
- Track sales per labor hour by shift so you can see precisely which services are overstaffed.
The lever most operators forget
Prime cost is a ratio, and the denominator is sales. Raising menu prices by 3% lowers prime cost percentage without touching a single cost line, because food and labor stay flat while sales rise. If your costings show prices have fallen behind ingredient inflation, re-pricing is usually faster and less damaging than cutting.
Work out defensible prices with the menu price calculator rather than applying a flat percentage across the menu, which tends to price your best-value items out of the market.
The trade-off between food and labor
Food cost and labor cost are not independent, and this is precisely why prime cost exists as a metric. Almost every operational decision moves cost between the two buckets:
| Decision | Food Cost | Labor Cost |
|---|---|---|
| Buy pre-portioned proteins | Up | Down |
| Butcher whole primals in house | Down | Up |
| Bought-in desserts | Up | Down |
| Make stocks and sauces from scratch | Down | Up |
Judge every one of these decisions on its effect on prime cost, not on either component alone. A chef proudly reporting a two-point food cost reduction has achieved nothing if it cost three points of labor to get there — and looking only at food cost would have hidden that completely.
Building a weekly prime cost rhythm
Monthly prime cost is a post-mortem. Weekly prime cost is a management tool, and the difference in how the business runs is substantial. A workable weekly routine looks like this:
- Count inventory the same day each week, ideally before service on your quietest morning. Consistency of timing matters more than perfection of counting.
- Pull sales for exactly the same period the inventory covers, so the two sides of the ratio align.
- Accrue labor to the week rather than using the payroll run date, since payroll periods rarely match trading weeks.
- Record the result and the two components separately, so you can see which one moved.
- Investigate any two-point swing the same week, while people still remember what happened.
Four data points a month reveal trends a single monthly figure cannot. More importantly, they let you act inside the period rather than reading about the problem after it has finished costing you money.
Frequently asked questions
Why track prime cost weekly instead of monthly?
By the time a monthly P&L reveals a problem, four weeks of overspending have already happened. Weekly prime cost tracking lets you catch a scheduling issue or a food cost spike within days and fix it inside the same period.
Does prime cost include beverage cost?
Yes — the standard definition uses total COGS, food and beverage combined, plus total labor. Some operators also track a food-only prime cost internally, which is fine as long as you're consistent.
Can I have a great food cost and still a bad prime cost?
Absolutely — that's exactly why prime cost exists. A 27% food cost achieved by heavy prep labor can easily produce a worse prime cost than a 33% food cost with lean staffing. The combined number is the honest one. Read more in our prime cost deep-dive.