A restaurant prime cost calculator adds your food, beverage and labor costs and shows them as a share of sales, the key number for controlling restaurant profit. Formula: Prime cost = food + beverage + labor. Prime % = prime / sales x 100. COGS % = (food + beverage) / sales x 100. Labor % = labor / sales x 100. With $100,000 of sales, $34,000 of food and beverage cost and $30,000 of labor, prime cost is 64% of sales.
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How to use the restaurant prime cost calculator
- Enter total sales for the period.
- Enter food cost and beverage cost for the same period.
- Enter total labor, including payroll taxes and benefits.
- Set your target and compare.
What formula does the restaurant prime cost calculator use?
- Cost of goods sold (COGS) = food cost + beverage cost for the period
- Total labor = wages + payroll taxes + benefits for the same period
- Prime cost = COGS + total labor
- Prime cost % = prime cost ÷ total sales × 100
Food and beverage cost should be what you used, not just what you bought: opening inventory plus purchases minus closing inventory. Using purchases alone can make a week look very good or very bad depending on when deliveries arrived.
Restaurant prime cost calculator worked example
| Sales | Food | Beverage | Labor | COGS % | Labor % | Prime cost % |
|---|---|---|---|---|---|---|
| $100,000 | $28,000 | $6,000 | $30,000 | 34.0% | 30.0% | 64.0% |
| $100,000 | $26,000 | $5,000 | $28,000 | 31.0% | 28.0% | 59.0% |
| $60,000 | $19,000 | $3,000 | $20,000 | 36.7% | 33.3% | 70.0% |
| $150,000 | $42,000 | $12,000 | $40,000 | 36.0% | 26.7% | 62.7% |
With $100,000 of sales, $28,000 of food, $6,000 of beverage and $30,000 of total labor, prime cost is $64,000, or 64% of sales. That is 4 points above the tool’s default 60% target, so $4,000 of the period’s sales went to costs the target would have left as gross profit.
Why prime cost matters
Food, drink and labor are the largest costs in most restaurants and the ones managers can change week to week. Rent, insurance and utilities are mostly fixed. Tracking prime cost weekly, rather than waiting for monthly accounts, lets you spot a rising food cost or overstaffed shifts while there is still time to act. The 60% default in the restaurant prime cost calculator is a widely used rule of thumb rather than a standard; full-service, quick-service and bar concepts have different cost structures, so set a target that fits your business.
What to include in labor
Include wages for all staff, managers’ salaries, the employer share of payroll taxes, workers’ compensation insurance and benefits such as health insurance. Under federal law, employers who take a tip credit must pay tipped employees at least $2.13 an hour in cash wages and make sure wages plus tips reach the $7.25 federal minimum wage; many states require more. Tips your staff receive are not your labor cost, but the employer share of payroll taxes on reported tips is.
Ways to lower prime cost
- Cost every menu item and review prices when ingredient costs rise.
- Cut waste with prep lists, portion control and first-in, first-out storage.
- Schedule to sales, using past covers by hour to set staffing.
- Review the menu and drop items that sell slowly and spoil quickly.
- Count inventory on the same day each week so periods are comparable.
Estimates for planning only, not legal, tax or financial advice. Check carrier, card network, lender and state rules before relying on a figure.
Tracking food cost and labor separately
Prime cost combines two very different costs, so look at each part on its own as well. The restaurant prime cost calculator shows COGS and labor as separate percentages for that reason. A rise in food cost can come from supplier prices, waste, theft or portions creeping up; a rise in labor can come from overtime, slow periods with full staffing or new hires being trained. Each needs a different response, and the combined figure alone will not tell you which one moved.
Compare weeks with similar sales, since labor as a share of sales rises in quiet weeks even when hours stay the same. A holiday week and an ordinary week are not a fair comparison. Use the restaurant prime cost calculator each week and note anything unusual, such as a large catering order or a menu change, so that you can explain a jump when you review the month. Over a quarter, the trend matters more than any single week, and the restaurant prime cost calculator makes the trend easy to track.
Related converters and calculators
Related calculators:
- Profit margin calculator: margins
- Break even calculator: break-even
- Employee cost calculator: labor
- Tip calculator: tips
Sources
DOL Fact Sheet #15: Tipped employees under the FLSA; IRS Publication 15 (Circular E), Employer’s Tax Guide; SBA: Manage your finances.
Questions about this calculator
What is prime cost?
Food and beverage cost plus total labor.
What is a good prime cost percentage?
Many operators use about 60% of sales as a rule of thumb; the right target depends on the concept.
Should labor include payroll taxes?
Yes, include taxes, workers’ comp and benefits.
Are tips part of labor cost?
Tips belong to staff, but employer payroll taxes on reported tips are a cost.
How often should I calculate it?
Weekly, so you can act quickly.
Check the assumptions and units before relying on a result. Financial, tax and health estimates do not replace advice for your individual circumstances.
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