The formula, benchmarks by concept, a worked example, and the weekly routine that keeps food, beverage and labor cost in range.
By Rob Bruni, founder of OpsEdge Hospitality, twenty years running restaurants, bars, clubs and resorts. Updated November 2026.
Free printable: Weekly Prime Cost Close checklist (PDF)
Prime cost is food cost, beverage cost and labor cost added together, as a percent of sales. It is the biggest share of every dollar a restaurant or bar takes in, and it is the part you can actually control from the floor. This guide covers the formula, the benchmarks for each concept, a worked example, the weekly routine we use with operators, and what to do when the number comes in high.
Every restaurant has two kinds of cost. Fixed costs like rent, insurance and loan payments are set when you sign the lease and barely move week to week. Controllable costs move with every shift: what you buy, what you waste, what you pour, and who you schedule. Prime cost is the sum of the controllable costs that matter most, which is cost of goods sold (food and beverage) plus total labor.
In most operations prime cost is 55 to 68 percent of sales. Rent is usually 6 to 10 percent. That is why we tell managers to stop staring at the rent line and start watching prime cost. A two point move in prime cost on a $2 million restaurant is $40,000 a year, and a two point move happens quietly, one over-scheduled Tuesday and one careless walk-in at a time.
The other reason to watch it is timing. Most managers first see their costs on the monthly P&L, three to four weeks after the money is gone. Prime cost can be worked out every Monday from numbers you already have, which turns a report into a control.
Where:
Keep the three parts separate on your sheet. A 62 percent prime cost made of 30 percent food, 8 percent beverage and 24 percent labor needs a different fix than one made of 26, 6 and 30.
A full service restaurant, one week
Net sales: $48,000
Food purchases (adjusted for inventory): $14,400 (30.0%)
Beverage purchases (adjusted): $3,360 (7.0%)
Hourly wages: $11,500. Salaried management: $2,300. Taxes and benefits: $2,200. Total labor: $16,000 (33.3%)
Prime cost: ($17,760 + $16,000) ÷ $48,000 = 70.3%
At 70 percent, this restaurant is roughly five points above the top of the full service range. Five points on $48,000 a week is $2,400 a week, or about $125,000 a year. Notice that food is inside the normal band. Labor is the problem, and within labor the question is whether it is too many hours, hours in the wrong places, or overtime. That is why the parts matter more than the total.
There is no single right number. Service style, menu, market and whether you own the building all move it. These are the ranges we use as a starting point, then we track the operation's own trend.
| Concept | Prime cost target | Food | Beverage | Labor |
|---|---|---|---|---|
| Quick service / fast casual | 55 to 60% | 28 to 32% | 18 to 24% | 25 to 30% |
| Full service restaurant | 60 to 65% | 28 to 34% | 18 to 24% | 30 to 35% |
| Bar or beverage-led | 50 to 55% | 28 to 34% | 18 to 22% | 25 to 30% |
| Fine dining / private club | 62 to 68% | 30 to 36% | 22 to 28% | 33 to 38% |
Food, beverage and labor percentages above are each measured against their own sales where you can split them (food cost against food sales, pour cost against beverage sales). Prime cost is always against total sales.
Two things to keep in mind. First, a low prime cost is not automatically good. A 52 percent full service restaurant is usually understaffed or under-portioning, and guests notice both before the P&L does. Second, the trend matters more than any single week. A restaurant that holds 63 percent every week is in better shape than one that swings between 58 and 69.
The free prime cost calculator takes four numbers and shows your percent against the benchmark for your concept, plus what each point is worth in dollars over a year. No signup.
Open the calculator Get the weekly Excel sheetAfter twenty years of looking at these numbers, the causes fall into a short list. Most operations have two or three of them at once.
This is the routine we install with operators. It takes about 30 minutes on Monday once the first two weeks are set up.
The point of weekly tracking is not the report. It is that a bad week costs you one week instead of a month.
Start with the part that is furthest out of its band, and fix in this order, because it is the order of speed.
A two to three point improvement in 90 days is realistic for most operations that have not been tracking. Five points is common when labor has never been scheduled to a forecast. Our Playbooks and Toolkits hold the full weekly systems for each of these, and the Prime Cost System page lays out the help available when you want someone to do the first pass with you.
The $495 Remote Prime Cost Review looks at four weeks of your real sales, purchases, inventory and payroll and shows you the three biggest leaks in dollars, with a 60-minute call to walk through the fixes. Fully remote, any US operation.
See the Prime Cost System On-site servicesFree printable
The Monday routine and worksheet we use to close the week: which numbers to pull, in what order, and the target bands to compare against. Two printable pages.
Here it is. We also sent a confirmation to your inbox.
Download the PDFPrime cost is cost of goods sold (food and beverage) plus total labor cost, expressed as a percent of total sales. It is the largest controllable cost in any restaurant or bar and the single best weekly measure of whether the operation is making money.
Most full service restaurants aim for 60 to 65 percent. Quick service and fast casual run lower, around 55 to 60 percent. Bar-led concepts can run 50 to 55 percent. Fine dining and private clubs often run 62 to 68 percent because of higher labor. The trend week to week matters more than any single number.
Add food cost, beverage cost and total labor cost for the period, then divide by net sales for the same period and multiply by 100. Labor should include wages, salaries, payroll taxes and benefits, not wages alone.
Yes. Any cost of having people working in the operation belongs in labor, including salaried management, payroll taxes, workers' comp and benefits. Leaving them out is the most common reason a weekly prime cost looks two to five points better than the P&L.
Weekly. Monthly is too late to change anything, and daily is too noisy. A Monday routine using last week's sales, purchases and payroll takes about 30 minutes and catches problems while they are still one week old.
No. A prime cost well below the range for your concept usually means understaffing, under-portioning or deferred quality, and guests feel it before the numbers show it. Aim for the range, hold it steadily, and spend the savings where guests notice.
