Hospitality Operations & Margin Lab

Restaurant Prime Cost Calculator

Model restaurant prime cost percentage, food & beverage COGS, labor cost benchmarks, and menu price uplift for food service profitability.

Prime Cost Engine Sensitivity Heatmap Prime Cost Theory FAQ

Restaurant Archetypes

Load calibrated hospitality models.

Step 1: Input Monthly Sales, COGS & Labor Expenditures

Restaurant Operating Inputs

$
Total gross food & beverage sales.
$
Meat, produce, dairy, dry goods.
$
Liquor, beer, wine, non-alcoholic.
$
Servers, hosts, bussers, bartenders.
$
Line cooks, prep, dishwashers.
$
Salaried GM, chef, payroll taxes.
%
Industry standard: 55.0% - 60.0%.
Prime Cost % of Revenue
64.0%
COGS (34.0%) + Labor (30.0%)
Operational Health Status
Margin Squeeze (60-65%)
Total Prime: $80,000 / mo
Variance vs. Target Budget
+$7,500
Vs. 58.0% target budget ($72,500)
Required Menu Price Uplift
+10.3%
Menu price increase to reach target

COGS % vs. Labor % Prime Cost Sensitivity Matrix

Evaluates overall restaurant Prime Cost % across varying food/beverage costs and labor scheduling efficiency.

Restaurant Financial Management

Principles of Prime Cost Control

Key hospitality economics governing the prime cost benchmark:

  • The 60% Rule: Prime cost must remain under 60% of revenue. The remaining 40% must cover occupancy (rent, utilities), marketing, equipment maintenance, and deliver net profit (typically 5%–10%).
  • Controllable Expenses: Unlike fixed rent and insurance, COGS and labor are variable and controllable by management on a daily and weekly basis.
  • The Tradeoff Balance: Pre-cut ingredients increase food COGS but lower kitchen prep labor. In-house prep lowers food COGS but raises labor hours.
  • Beverage Profit Shield: High beverage margins (18%–22% pour cost) subsidize higher kitchen food costs (30%–34%), protecting overall prime cost.

Classify dish profitability in the Menu Engineering Lab.

Mathematical Formulation

Prime cost equations

Total_COGS = Food_COGS + Beverage_COGS

Total_Labor = FOH_Wages + BOH_Wages + Mgmt_Taxes

Prime_Cost = Total_COGS + Total_Labor

Prime_Cost_% = ( Prime_Cost ÷ Total_Revenue ) × 100%

Required_Revenue = Prime_Cost ÷ ( Target_Prime_% ÷ 100 )

Calculate recipe portion costs in the Food Cost Lab.

FAQ

Restaurant prime cost & labor questions

What is Prime Cost in restaurant management?

Prime Cost is the sum of a restaurant's Total Cost of Goods Sold (Food + Beverage COGS) and Total Labor (FOH, BOH, Management, and payroll taxes/benefits). It represents the single largest group of controllable operating expenses in food service.

What is the target Prime Cost percentage for restaurants?

The industry standard target is 55% to 60% of total food and beverage sales. Full-service casual restaurants typically target 58%–60%, while fast-casual or high-volume bars target 50%–55%. Any prime cost exceeding 65% puts the business at critical insolvency risk.

How can a restaurant reduce its Prime Cost?

Restaurants reduce prime cost by: (1) re-engineering recipes and reducing kitchen food waste, (2) raising menu prices on high-popularity dishes, (3) optimizing staff scheduling based on hourly sales volume, and (4) renegotiating supplier wholesale pricing.

What is the difference between Prime Cost and Food Cost?

Food Cost measures only ingredient and food purchases (typically 28%–32% of sales). Prime Cost combines both Food & Beverage COGS with all labor expenses (wages, taxes, benefits), capturing roughly 60% of every dollar that enters the restaurant.

Can I export the Prime Cost analysis and sensitivity matrix to CSV?

Yes. You can export complete monthly F&B sales, COGS breakdowns, labor breakdowns, cost variances, and the 7x5 sensitivity heatmap as a UTF-8 CSV spreadsheet with formula defense.

Continue Exploring Hospitality & Profitability Tools

Explore our Hospitality Hub, re-engineer menu items in the Menu Engineering Lab, calculate recipe costs in the Food Cost Lab, model hotel yield in the Hotel Revenue Lab, or manage staff capacity in the Overtime vs. New Hire Lab.