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- Prime cost is your cost of goods sold plus total labor, usually shown as a percentage of sales.
- Many operators aim to keep it around 60% to 65% of sales or lower, but the right target depends on your concept.
- It is one of the quickest numbers to check each week, because food and labor are the costs you control most.
- The calculator also shows what is left for rent, utilities and profit.
How to use the restaurant prime cost calculator
Enter your sales
Type your total sales for the week or month. Use the same period for every other figure.
Add your cost of goods sold
Enter your food and beverage cost directly, or switch to the inventory method and enter beginning inventory, purchases and ending inventory.
Add your labor costs
Enter hourly wages, management salaries, and payroll taxes and benefits.
Check your target
Open the advanced option to set your own target percentage. The result shows how far above or below it you are.
How prime cost is calculated
Prime cost adds up the two largest costs in most restaurants. Divide it by sales and you get one percentage that you can track over time.
Prime cost
Cost of goods sold = beginning inventory + purchases − ending inventory
Total labor = hourly wages + management salaries + payroll taxes and benefits
Prime cost = cost of goods sold + total labor
Prime cost % = prime cost ÷ total sales × 100
Rent, utilities, marketing and repairs are not part of prime cost.
Restaurant prime cost examples
Example 1: A month at a casual restaurant
Sales are $80,000. Food and beverage cost is $24,000. Labor is $16,000 in hourly wages, $5,000 in management salaries and $3,500 in payroll taxes and benefits.
- Cost of goods sold $24,000 (30.0% of sales)
- Total labor $24,500 (30.6% of sales)
- Prime cost $48,500
- Prime cost % 60.6%
- Left for other costs and profit $31,500
At a 60% target, prime cost would be $48,000, so this month is $500 over.
Example 2: Cost of goods sold from inventory
Counting inventory at the start and end of the period gives a more accurate food cost than using purchases alone.
- Beginning inventory $8,000
- Purchases $25,000
- Ending inventory −$9,000
- Cost of goods sold $24,000
That matches the first example, so the prime cost is the same.
Example 3: Sales needed to hit your target
Keep the prime cost at $48,500. How large would sales need to be for prime cost to be 60%?
- Sales needed $80,833
That is about $833 above this month, which shows how higher sales lower the percentage when costs stay flat.
Why prime cost matters
Food and labor move quickly with how you buy, prep, price and schedule. When one of them drifts up, prime cost shows it before the rest of the profit and loss statement does.
Ways restaurants lower prime cost
- Track waste, portion sizes and over-prepping
- Review menu prices against current ingredient costs
- Schedule staff against expected sales, not habit
- Cut or rework low-margin items
- Compare vendors and negotiate prices
Who uses a restaurant prime cost calculator
Independent restaurants
Keep a weekly eye on food and labor before the month closes.
Cafés and bakeries
Spot cost creep in ingredients and staffing hours.
Food trucks
Check each event against what it costs to run.
Bars
Track beverage cost and labor together.
Compare the same period week to week or month to month. One month can be thrown off by an inventory count or a large delivery. If you are thinking about raising menu prices, see the price increase break-even calculator. To work out what an hour of staff really costs, use the fully loaded labor rate calculator, and for menu pricing try the markup calculator.
Restaurant prime cost calculator FAQ
What is prime cost in a restaurant?
Prime cost is the sum of your cost of goods sold and your total labor cost. It is usually expressed as a percentage of sales.
What is a good prime cost percentage?
Many operators use 60% to 65% as a rough ceiling, and some aim lower. Full-service, quick-service and bar concepts differ, so compare against your own history and similar restaurants.
Does prime cost include rent?
No. Rent, utilities, marketing and repairs sit outside prime cost. They are paid from what is left after prime cost.
Should owner pay be included?
If an owner works as a manager and is paid a salary, include it in labor. Otherwise your labor cost looks lower than it really is.
Should I track prime cost weekly or monthly?
Both work. Weekly tracking helps you react faster. Use the same period for sales and costs so the percentage is accurate.
How are tips handled?
Tips that customers pay to staff are normally not your cost, but payroll taxes on them and any wage top-ups are. Follow the treatment your accountant uses.