Prime cost is your COGS (food and beverage) plus your total labor cost, expressed as a percentage of sales. It's the single best health check for a restaurant. Enter your numbers for any period — a week is best — and see where you stand.
Enter COGS, labor, and sales for the same period to see your prime cost.
Prime cost % = (COGS + total labor) ÷ total sales × 100
A restaurant does $45,000 in weekly sales. COGS for the week is $12,500 (purchases adjusted for inventory) and total labor — wages, salaried managers, payroll taxes, benefits — is $14,000. Prime cost is $26,500, or 58.9% of sales. That's inside the healthy range, with a little room before the 60% line.
Using raw purchases instead of usage. A big delivery on the last day of the period inflates the number; running the shelves down deflates it. Take a beginning and ending inventory and use beginning + purchases − ending as your COGS. For the labor side, our labor cost percentage calculator isolates that half of the equation. For the full story, read What Is Prime Cost?
Most healthy full-service restaurants run a prime cost of 55–62% of sales. Quick-service concepts can land lower, in the 50–58% range. Consistently above 65% means the operation is struggling to produce real profit.
All of it: hourly wages, salaried managers, payroll taxes, workers' compensation, and benefits. Leaving out taxes and salaried staff is the most common way operators understate their prime cost.
Weekly. Monthly numbers hide problems for weeks before you see them. A weekly prime cost using purchases adjusted for inventory gives you time to react while the problem is still small.
Food cost and labor trade off against each other — prep-heavy scratch cooking lowers food cost but raises labor, and vice versa. Prime cost captures both sides in one number, so good trade-offs aren't punished.
If your prime cost won't come down, the problem is usually upstream — purchasing, scheduling, or layout. That's the work we do.
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