Prime Cost Calculator
Enter last week's sales, food and beverage cost, and every labor dollar including payroll taxes and benefits. You get prime cost in dollars, prime cost percent, and the food and labor split.
Net sales for the week, after comps and discounts, before tax and tips.
Beginning inventory plus purchases minus ending inventory, for food, beer, wine, and liquor.
Every hourly dollar for the week, overtime included.
One week of salary for managers and chefs.
Employer payroll taxes, health insurance, workers comp, and any other benefits for the week.
- Prime cost
- $27,300.00
- Food and beverage %
- 30%
- Labor % (with taxes and benefits)
- 35%
- Total labor
- $14,700.00
How I use this on a Friday
I watch prime cost because it tells me pretty quickly whether the restaurant is actually under control. Food cost can look good while labor is running high. Labor can look great because we cut too hard, while waste, comps, and poor execution are eating up the savings somewhere else. Looking at one number by itself doesn't tell the whole story. Prime cost puts the two biggest controllable expenses in front of me at the same time. When that number starts moving the wrong way, I don't just tell the team to cut costs. I want to know why. Is it overtime? Over-portioning? Waste? Scheduling? Vendor prices? The calculator tells me where we are. My job as the GM is figuring out what's driving the number and what we can actually fix.
K. Pinckney, restaurant GM and founder of WRI
The math
Total labor is hourly wages plus salaried pay plus payroll taxes and benefits. Prime cost is food and beverage cost plus total labor. Prime cost percent is prime cost divided by sales, times 100.
Example: Last week you did $42,000 in sales. Food and beverage cost was $12,600. Hourly wages were $9,500, salaried pay was $2,800, and payroll taxes and benefits were $2,400. Total labor is 9,500 + 2,800 + 2,400 = $14,700. Prime cost is 12,600 + 14,700 = $27,300. Prime cost percent is 27,300 / 42,000 = 65%. That splits into 30% food and 35% labor.
Questions operators ask
What is prime cost?
Your cost of goods sold plus your total labor. They are the two biggest costs you can control week to week, so looking at them together tells you more than either one alone.
What is a good prime cost percentage?
A commonly cited range is about 55% to 65% of sales. Full service with a big bar program can look different from quick service. Watch your own trend week over week more than any one target.
Do payroll taxes and benefits count as labor?
Yes. Leave them out and your labor looks a few points better than it really is. Include employer payroll taxes, health insurance, workers comp, and any other benefits you pay for.
Should I include salaried managers?
Yes. Prime cost is all labor, not just hourly. Use one week of salary for every salaried manager and chef on the payroll for this store.
Why weekly and not monthly?
A month is too long to wait to find out overtime ran wild or a vendor raised prices. Weekly gives you time to fix it before the month closes. You need a real inventory count each week for the cost of goods to be right.
My prime cost went up. What do I look at first?
Check which side moved. If labor went up, look at overtime and the schedule against sales. If food and beverage went up, look at portioning, waste, comps, and vendor prices.