Use this free restaurant prime cost calculator to estimate prime cost, prime cost percentage, total cost of goods sold, labor cost, and how those costs compare with sales.
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Restaurant Prime Cost Calculator
Calculate restaurant prime cost by combining food and beverage COGS with hourly, salaried, and payroll burden labor.
Calculator results are estimates. Check your invoices, payroll reports, POS reports, and accountant before making financial decisions.
How to use this restaurant prime cost calculator
Enter sales, food cost, beverage cost, paper or packaging cost, labor cost, payroll taxes, benefits, manager salaries, and other labor-related expenses for the same time period. The calculator helps estimate total prime cost and prime cost percentage so you can see how much of each sales dollar is going toward cost of goods and labor.
Restaurant prime cost formula
Prime cost is calculated by adding cost of goods sold and total labor cost.
Prime cost = cost of goods sold + total labor cost
Prime cost percentage is calculated by dividing prime cost by sales, then multiplying by 100.
Prime cost percentage = prime cost ÷ sales × 100
Example prime cost calculation
If sales are $85,000, cost of goods sold is $27,000, and labor cost is $32,200, prime cost is $59,200. The prime cost percentage is about 69.6%. That means almost 70 cents of every sales dollar is going toward food, beverage, packaging, and labor before rent, utilities, insurance, software, repairs, debt, taxes, or owner profit.
Why restaurant prime cost matters
Prime cost is one of the most important restaurant profitability numbers because it combines the two largest controllable cost groups: cost of goods sold and labor. Sales can look healthy, but if prime cost is too high, there may not be enough margin left to cover rent, overhead, debt, taxes, and profit.
Common restaurant prime cost mistakes
- Reviewing food cost and labor separately when both are moving at the same time.
- Leaving beverage, paper, packaging, or disposables out of cost of goods sold.
- Ignoring manager salary, payroll taxes, benefits, bonuses, and workers’ compensation.
- Comparing sales from one period with costs from another period.
- Waiting until month-end to catch a weekly prime cost problem.
When should restaurants review prime cost?
Review prime cost at least monthly, and watch food cost and labor cost weekly. Prime cost should be reviewed whenever menu prices, vendor costs, wage rates, staffing levels, delivery volume, or sales mix changes.
Restaurant prime cost calculator FAQ
What is restaurant prime cost?
Restaurant prime cost is the total of cost of goods sold and labor cost. It usually includes food, beverage, paper, packaging, hourly labor, salaried labor, payroll taxes, benefits, and other labor-related costs.
How do you calculate prime cost percentage?
Divide prime cost by total sales, then multiply by 100. For example, if prime cost is $59,200 and sales are $85,000, the prime cost percentage is about 69.6%.
Should packaging be included in prime cost?
Yes, if packaging is part of your cost of goods sold. Boxes, cups, containers, bags, sauce cups, and paper goods can materially affect real restaurant cost, especially for takeout, delivery, and catering.
Should manager salary be included in prime cost?
Yes, if you want a complete view of labor cost. Some operators track management labor separately, but it still affects profitability and should be considered when reviewing prime cost.
What is a good prime cost percentage?
A good prime cost percentage depends on restaurant concept, service style, wage rates, menu pricing, rent, and sales volume. The most important thing is to track the number consistently and understand whether food cost, labor cost, or both are pushing it too high.