See your food, beverage and labor cost as one number, and what hitting your target is worth over a year.
Net sales after comps and discounts, before tax and tips.
Beginning inventory + purchases − ending inventory.
Everyone on payroll for the period, including managers.
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After 20 years running food and beverage operations, we can tell you the number that separates a profitable month from a bad one is prime cost: food, beverage and labor cost added together, as a percent of sales. It is the biggest share of every dollar you take in, and it is the part you can actually control.
Most managers only see it when the P&L shows up, weeks after the money is gone. This calculator gives you the number, the breakdown, and what closing the gap is worth in under a minute. No login and no email required to see your results.
Pull food and beverage sales, food and beverage cost of goods, and total labor for one period from your POS, inventory counts and payroll. Use real cost of goods (beginning inventory plus purchases minus ending inventory), not just invoices.
Pick your concept type so the ranges fit your operation, then set the target slider to the prime cost you want to run at.
Read the breakdown. The bar that is furthest past its typical range is where to start, and the gap figure shows what fixing it is worth over a year.
Prime cost equals total cost of goods sold (food plus beverage) plus total labor (hourly wages, salaries, payroll taxes and benefits). Divide prime cost by total sales and multiply by 100 to get the percent.
Example: a restaurant doing 200,000 in monthly sales with 60,700 in cost of goods and 73,800 in total labor has a prime cost of 134,500, or 67.3 percent. Bringing that to a 60 percent target puts about 14,500 a month, or roughly 174,000 a year, back on the bottom line.
| Concept | Prime cost to aim for |
|---|---|
| Quick service / fast casual | 55 to 60 percent |
| Full service restaurant | 60 to 65 percent |
| Bar or beverage-led | 50 to 55 percent |
| Fine dining / private club | 62 to 68 percent |
Ranges vary by market, menu and service style. Use them as a starting point, then track your own trend week to week.
Track it weekly, not monthly. A weekly number catches a problem in 7 days instead of 30, while you can still fix it.
Re-cost your top sellers against current invoices. Vendor prices creep, menu prices do not, and the margin disappears quietly.
Schedule labor to forecast covers. Build the schedule from expected sales, track sales per labor hour, and cut early on slow shifts.
Prime cost is your total cost of goods sold (food and beverage) plus your total labor cost, including payroll taxes and benefits. It is usually the largest controllable expense in a restaurant or bar.
Many full service restaurants aim for 60 to 65 percent of sales. Quick service often runs lower, and bars with strong beverage sales can run lower still. The right target depends on your concept, rent and price point.
Add food cost of goods, beverage cost of goods and total labor. Divide that by total sales and multiply by 100. The calculator above does this for you and breaks out each part.
Yes. Include hourly staff, salaried managers, payroll taxes, benefits and workers' comp. Leaving managers out makes prime cost look better than it is.
Weekly. It takes a weekly inventory count and a payroll report, and it lets you correct course before the month closes.
Prime cost is three numbers added together, and each one has its own free calculator. The food cost calculator works from an inventory count and purchases and checks a plate against its menu price. The labor cost calculator splits payroll by department and turns the gap into hours to schedule. The pour cost calculator prices drinks and finds bar variance. And the break-even calculator shows the sales you need before any of it turns into profit.
Want this every week without the math? The free Prime Cost Check sheet tracks it Monday to Monday. If your number came back high, a $495 Remote Prime Cost Review shows you exactly where the money is going and what to fix first.
See the Remote Prime Cost Review Get the free weekly sheetRules of thumb only. Results are estimates and not financial advice.
