Prime Cost Calculator (Food + Labor)
Combine cost of goods and total labor into prime cost and prime cost percentage — the single number restaurant operators manage to.
How it works
Prime cost = cost of goods sold + total labor · Prime cost % = prime cost ÷ total sales × 100
Prime cost is the sum of the two largest and most controllable expenses in a restaurant: cost of goods sold (food and beverage) and total labor. Expressed as a share of sales it is the number most operators manage the business to, because rent and other overhead are relatively fixed. A widely used target is 60% of sales or less for full-service; when prime cost drifts above 65% the remaining margin rarely covers overhead and profit.
Worked example
With $12,000 of food and beverage cost and $11,000 of labor, prime cost is $23,000. On $40,000 of sales that is 23,000 ÷ 40,000 = 57.5% — under the 60% target, split as 30% food/beverage and 27.5% labor.
Frequently asked questions
What is prime cost in a restaurant?
Prime cost is cost of goods sold (food and beverage) plus total labor. These are the biggest controllable costs, so operators track their combined share of sales as the headline efficiency metric.
What is a good prime cost percentage?
Many full-service restaurants target 60% of sales or less; quick-service can run lower. Above 65% typically leaves too little to cover rent, utilities and profit, signalling that food cost, labor or pricing needs attention.
Why combine food and labor instead of tracking them separately?
Because they trade off. A kitchen can lower food cost with more prep labor, or cut labor by buying pre-portioned ingredients that cost more. Managing prime cost as one number stops one lever from quietly inflating the other.
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Educational estimate, not financial advice.