Prime Cost Calculator

The #1 restaurant profitability metric

Prime cost = food & beverage costs + total labor. It is the single most important number in your restaurant. Enter your numbers for any period (weekly recommended) and see how you compare.

Enter Your Numbers

Cost of Goods Sold (COGS)

Total food purchases minus inventory change

Alcohol, soft drinks, coffee (optional)

Labor Costs

All employee pay for the period

Health insurance, PTO, etc.

Employer-side payroll taxes

Revenue

Total sales for this period

Optional — for annual savings calculation

How Prime Cost Is Calculated

Prime Cost = (Food Cost + Beverage Cost) + (Wages + Benefits + Payroll Tax)
Prime Cost % = Prime Cost ÷ Total Revenue × 100

Prime cost captures the two largest expense categories in any restaurant: what you spend on ingredients and what you spend on people. Together these typically account for 55-65% of total revenue. The remaining 35-45% must cover rent, utilities, marketing, equipment, insurance, and profit.

Every percentage point of prime cost on $1M in annual revenue equals $10,000. A restaurant that reduces prime cost from 66% to 61% on $1M in revenue adds $50,000 to the bottom line — often the difference between losing money and generating a healthy profit.

Prime Cost Benchmarks by Restaurant Type

ConceptFood CostLabor CostPrime Cost
Fine Dining30-38%30-35%60-68%
Full Service28-35%28-33%55-65%
Fast Casual25-32%25-30%55-62%
Quick Service25-30%20-28%55-60%
Pizza20-28%25-30%50-60%
Coffee Shop18-25%28-35%50-58%
Bar / Nightclub20-25%22-30%45-55%

Frequently Asked Questions

Prime cost is the sum of your total food and beverage costs (COGS) plus your total labor costs, including wages, salaries, payroll taxes, and benefits. It is the single most important profitability metric in the restaurant industry because it typically accounts for 55-65% of total revenue. If your prime cost exceeds 65%, your restaurant is almost certainly struggling to generate meaningful profit.
Target prime cost varies by concept: Full service 55-65%, Fast casual 55-62%, QSR 55-60%, Coffee shops 50-58%, Bars 45-55%. The key is that prime cost below 60% gives you room for rent, utilities, marketing, and profit. Above 65% means you are likely losing money or barely breaking even.
You have two levers — food cost and labor cost. On the food side: reduce waste, renegotiate vendor pricing, engineer your menu to promote high-margin items, and implement strict portioning. On the labor side: match staffing to sales patterns using POS data, cross-train employees, stagger shift start times, and reduce hours on consistently slow shifts.
Weekly is ideal. Monthly is the minimum acceptable frequency. At $1M annual revenue, every percentage point of prime cost equals $10,000 per year — so catching a problem one week earlier saves roughly $200. Automated tools like Meridian calculate prime cost in real time from your POS data.
Yes. A restaurant with 28% food cost and 38% labor has a 66% prime cost and is likely unprofitable. A restaurant with 35% food cost and 26% labor has a 61% prime cost and is healthier. Looking at food cost in isolation can be misleading — prime cost tells the complete story.

Related Tools & Resources

Food Cost Calculator Menu Pricing Calculator Food Cost Guide Lower Operating Costs Staffing Optimization

Track prime cost automatically — every day.

Meridian connects to your POS and calculates prime cost in real time. Get alerts when it exceeds your target — before it costs you thousands.

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