Prime cost is the sum of your food cost and labor costs - together they usually make up 55-65% of your revenue. Many restaurant owners only look at food cost, but forget that staff is often just as expensive. By looking at both together you get real insight into your profitability.
What exactly is prime cost?
Prime cost consists of two components:
- Food cost: all ingredients you purchase
- Labor costs: wages, social contributions, temp agencies
These two costs are directly linked to your production. More guests = more ingredients and more staff needed.
💡 Example prime cost calculation:
Restaurant with €50,000 monthly revenue:
- Food cost: €15,000 (30%)
- Labor costs: €12,500 (25%)
- Prime cost: €27,500 (55%)
This means €22,500 is left for rent, energy, depreciation and profit.
Why is the relationship between food cost and prime cost important?
You can't just look at food cost. A dish with low food cost can still be unprofitable if it takes a lot of time to prepare.
💡 Comparison of two dishes:
Pasta carbonara:
- Food cost: 28% (€4.50)
- Prep time: 8 minutes
- Labor cost per portion: €2.40
Beef wellington:
- Food cost: 35% (€12.00)
- Prep time: 45 minutes
- Labor cost per portion: €13.50
The pasta has lower food cost, but the wellington can be more profitable per minute of kitchen work.
How do you calculate labor costs per dish?
This is trickier than food cost, but important for a complete picture:
- Prep time: how many minutes does the dish take?
- Kitchen hourly rate: gross wage + social contributions
- Utilization rate: what % of the time is your chef productively working?
⚠️ Note:
Don't just count prep time, but also mise-en-place, cleanup and wait time. A chef isn't 100% productively busy all the time.
What are healthy prime cost percentages?
This varies by restaurant type, but here are common guidelines:
- Fine dining: 50-60% (higher labor costs due to service)
- Casual dining: 55-65%
- Fast casual: 60-70% (higher food cost, lower labor costs)
- Delivery only: 45-55% (no service, but packaging)
💡 Prime cost check:
If your prime cost exceeds 65%, you probably have a problem:
- Food cost too high (above 35%)
- Too much staff for your revenue
- Inefficient kitchen processes
- Prices too low
How do you use prime cost for better decisions?
Prime cost helps you with various decisions:
- Menu composition: which dishes are really profitable?
- Staff planning: how many chef hours do you need?
- Pricing: what is the minimum selling price?
- Efficiency: where can you save time in the kitchen?
By looking at food cost and labor costs together, you see the complete picture of your operational costs.
How do you calculate prime cost? (step by step)
Calculate your food cost percentage
Add up all ingredient costs from last month and divide by your revenue excl. VAT. Multiply by 100 for the percentage. For example: €15,000 ingredients on €50,000 revenue = 30% food cost.
Calculate your labor cost percentage
Add up all wages, social contributions and temp agency costs from last month. Divide by your revenue excl. VAT and multiply by 100. For example: €12,500 labor costs on €50,000 revenue = 25%.
Add food cost and labor costs together
Prime cost = food cost % + labor cost %. In the example: 30% + 25% = 55% prime cost. This means 55% of your revenue goes to ingredients and staff.
✨ Pro tip
Always check your prime cost together with your occupancy rate. High prime cost when the restaurant is full is less concerning than when it's half empty - then you know you've scheduled too much staff.
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 is a healthy prime cost for a restaurant?
For most restaurants, a healthy prime cost is between 55-65% of revenue. Fine dining restaurants can be slightly lower (50-60%) due to higher margins, while fast casual sometimes runs higher (60-70%) due to lower prices.
Should I include temp agency costs in prime cost?
Yes, all labor costs belong in prime cost. This means temp workers, freelance chefs, social contributions and any bonuses. It's about all costs directly linked to your production.
Can I calculate prime cost per dish?
Food cost per dish is easy to calculate, but labor cost per dish is trickier. You'd need to factor in prep time, hourly rate and utilization rate. For a general overview, prime cost per month is usually sufficient.
What if my prime cost exceeds 70%?
Then you're probably losing money. Check if your food cost isn't above 35% and if you don't have too much staff for your revenue. Your prices might be too low or you might be working inefficiently in the kitchen.
How often should I check prime cost?
Monthly is sufficient for most restaurants. With large fluctuations in revenue or staffing, you can check weekly. Daily is usually too much detail, unless you have major problems.
📚 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
- Warenwetbesluit Bereiding en behandeling van levensmiddelen (2024) — Official source
- WHO — Foodborne diseases estimates (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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