I've watched too many Dutch restaurant owners fail because they never understood prime cost. This single number - combining your food and labor expenses - should stay between 55% and 65% of revenue for independent restaurants. Miss this target, and you're essentially working for free while slowly bleeding cash.
What exactly is prime cost?
Prime cost breaks down into two major components:
- Food cost: every ingredient and beverage you purchase for resale
- Labor cost: complete wage expenses including owner salary, kitchen crew, and front-of-house staff
These combined expenses determine if you're making money or just keeping busy.
? Example:
Restaurant generating €50,000 monthly:
- Food cost: €15,000 (30%)
- Labor cost: €17,500 (35%)
- Prime cost: €32,500 (65%)
Available for overhead: €17,500 covering rent, utilities, equipment, and owner profit.
Prime cost benchmarks for Dutch restaurants
Your target percentage changes based on restaurant format:
- Fine dining: 60-70% (extensive staffing, premium ingredients)
- Casual dining: 55-65% (balanced approach to quality and efficiency)
- Fast casual: 50-60% (streamlined service, minimal staffing)
- Café with food: 55-65% (similar dynamics to casual dining)
⚠️ Watch out:
Prime costs exceeding 70% typically signal financial trouble. You won't have enough left for rent and utilities.
Food cost vs labor cost ratio
The internal balance between these costs matters more than you think:
- Food cost: 28-35% of total revenue
- Labor cost: 25-35% of total revenue
High food costs can work if you run tight labor. And vice versa - it's about the total.
? Compensation example:
Restaurant A: Premium ingredients, lean staffing
- Food cost: 35% (high-quality sourcing)
- Labor cost: 25% (efficient team structure)
- Prime cost: 60% (within healthy range)
Dutch labor cost considerations
Netherlands employment costs run higher due to:
- Minimum wage: €12.83 hourly (2024 rates)
- Employer contributions: roughly 25% above gross wages
- Holiday allowance: mandatory 8% annual addition
Most kitchen managers discover too late they've been calculating with gross wages instead of true employer costs. You need to factor in complete labor expenses, not just the salary you write on the contract.
? Actual labor costs:
Head chef earning €2,500 gross monthly:
- Gross salary: €2,500
- Employer contributions: €625 (25%)
- Holiday allowance: €200 (8%)
True monthly cost: €3,325
Monitor and adjust prime cost
Track your prime cost monthly at minimum:
- Week 1: Compile all ingredient purchases and wage expenses
- Week 2: Match against corresponding period revenue
- Week 3: Calculate percentage breakdown
- Week 4: Make necessary corrections
Food cost calculators handle ingredient tracking automatically, leaving you to add labor figures for complete prime cost analysis.
Related articles
How do you calculate your prime cost? (step by step)
Gather all food cost data
Add up all expenses for ingredients, beverages and packaging from the past month. Don't forget: meat, fish, vegetables, spices, oil, drinks - everything the guest consumes.
Calculate total labor costs
Add up all wages: yourself, kitchen, service, cleaning. Work with gross amounts plus employer contributions (approximately 25% extra). Also include temporary staff and casual workers.
Divide by revenue for percentage
Prime cost = (Food cost + Labor cost) / Revenue × 100. Use revenue excluding VAT for a clear picture. Between 55-65% is healthy for most Dutch restaurants.
✨ Pro tip
Calculate your prime cost during the first weekend of each month for 6 consecutive months - if it consistently hits 67% or above even during your busiest service periods, you've got structural problems that volume alone won't fix.
Calculate this yourself?
In the KitchenNmbrs app you can do this in just a few clicks. 7 days free, no credit card.
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Frequently asked questions
What if my prime cost exceeds 70%?
Should I include my own salary in labor costs?
Does prime cost fluctuate seasonally?
How frequently should I calculate prime cost?
Are employer contributions consistently 25% extra?
Can I temporarily run higher prime costs during menu changes?
Sources consulted
- EU Verordening 852/2004 — Levensmiddelenhygiëne (2004) — Official source
- EU Verordening 853/2004 — Hygiënevoorschriften voor levensmiddelen van dierlijke oorsprong (2004) — Official source
- EU Verordening 1169/2011 — Voedselinformatie aan consumenten (2011) — Official source
- NVWA — Hygiënecode voor de horeca (2024) — Official source
- NVWA — Allergenen in voedsel (2024) — Official source
- Codex Alimentarius — International Food Standards (2024) — Official source
- FSA — Safer food, better business (HACCP) (2024) — Official source
- BVL — Lebensmittelhygiene (HACCP) (2024) — Official source
Food Standards Agency (FSA) — https://www.food.gov.uk
The HACCP standards shown in this application are for informational purposes only. KitchenNmbrs does not guarantee that displayed values are current or complete. Always consult the FSA or your local authority for the latest regulations.
Written by
Jeffrey Smit
Founder & CEO of KitchenNmbrs
Jeffrey Smit built KitchenNmbrs from 8 years of hands-on experience as kitchen manager at 1NUL8 Group in Rotterdam. His mission: give every restaurant owner control over food cost.
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