Over 40% of restaurants fail within their first year, and poor cost control is the leading cause. Most owners only track prime cost monthly through their accountant, but that's too late to fix problems. A simple 15-minute weekly check shows exactly where you stand and lets you adjust before things spiral.
What exactly is prime cost?
Prime cost consists of two parts: your food cost (ingredients) and your labor costs (wages, payroll taxes, vacation pay). These represent your two largest controllable expenses.
💡 Example:
Restaurant with €25,000 weekly revenue:
- Food cost: €8,000 (32%)
- Labor costs: €9,000 (36%)
- Prime cost: €17,000 (68%)
That falls within the healthy 60-70% range.
Why weekly tracking matters
Your prime cost can spiral quickly due to:
- Rising ingredient prices - suppliers increase rates regularly
- Overstaffing - especially during slower periods
- Food waste - over-purchasing or inconsistent portioning
- Overtime costs - unexpected rushes create extra hours
Weekly checks catch trends before they destroy monthly profits. From tracking this across dozens of restaurants, I've seen how a 3% weekly increase compounds into 15% monthly losses.
⚠️ Watch out:
Prime cost above 75% typically means losses. At 80% or higher, you're guaranteed red ink unless other costs are exceptionally low.
The simple weekly calculation
You need just three numbers:
- Weekly revenue - straight from your POS system
- Purchases this week - all supplier invoices combined
- Labor costs - hours worked × hourly rate + payroll taxes
Add purchases and labor costs, divide by revenue, multiply by 100. That's your prime cost percentage.
💡 Example calculation:
Week 12 figures:
- Revenue: €28,500
- Purchases: €9,200
- Labor costs: €11,400
- Prime cost: €20,600
Percentage: (€20,600 / €28,500) × 100 = 72%
Quick labor cost estimation
For weekly checks, you don't need perfect precision. Use these estimates:
- Kitchen staff: €18-22 per hour (including payroll taxes)
- Service staff: €15-18 per hour (including payroll taxes)
- Chef/owner: €25-35 per hour
Total all hours worked and multiply by average hourly rate. This approach gives sufficient accuracy for trend spotting.
💡 Quick labor costs check:
Hours worked this week:
- Kitchen: 180 hours × €20 = €3,600
- Service: 220 hours × €16 = €3,520
- Management: 50 hours × €30 = €1,500
Total labor costs: €8,620
Red flags to monitor
These patterns signal trouble:
- Prime cost climbs 2 consecutive weeks - investigate immediately
- Food cost exceeds 35% - review purchasing and portions
- Labor costs top 40% - you're overstaffed
- Wide week-to-week swings - inconsistent planning
Healthy prime cost varies only 3-5% between weeks, barring special events or circumstances.
Digital tools that simplify tracking
Manual Excel calculations work but consume time and invite errors. Apps and tools like KitchenNmbrs automatically calculate food cost per dish and integrate with staff scheduling systems.
The benefit of integrated systems: you instantly see deviation sources and can adjust faster.
Monitor prime cost weekly (step by step)
Gather your weekly figures
Note your revenue from the POS system, add up all supplier invoices, and calculate your total labor costs (hours × hourly rate including payroll taxes).
Calculate your prime cost percentage
Add food cost and labor costs together, divide by your revenue and multiply by 100. A healthy prime cost is between 60-70%.
Compare with previous weeks
Look at the trend: is your prime cost rising or falling? Large deviations (>5%) deserve investigation into the cause.
Analyze deviations
Is the increase due to higher purchases, more staff, or lower revenue? Identify the main cause before taking action.
Adjust where needed
High food cost? Check portions and purchasing. High labor costs? Optimize your scheduling. Low revenue? Focus on marketing and guest satisfaction.
✨ Pro tip
Calculate your prime cost every Monday morning for the previous 7 days. This 15-minute routine starts your week with clear financial visibility and allows immediate course corrections.
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's considered a healthy prime cost percentage?
A healthy prime cost runs 60-70% of revenue. Below 60% is excellent, while anything above 75% threatens profitability.
Should VAT be included in prime cost calculations?
No, always exclude VAT from calculations. Your revenue and costs must use the same basis for accurate comparison.
How often should I monitor my prime cost?
Weekly monitoring provides the ideal balance. Daily tracking creates unnecessary work, while monthly reviews come too late for meaningful adjustments.
What if my prime cost jumps 10% suddenly?
Investigate immediately whether the spike comes from higher purchases, increased staffing, or lower revenue. A 10% increase can eliminate your entire monthly profit margin.
Can I track prime cost without a POS system?
Yes, but it requires more manual work. Track daily cash and card receipts manually, then total them for weekly revenue calculations. Consistency is key for accurate tracking.
Which payroll taxes belong in labor cost calculations?
Add roughly 25-30% to gross wages for employer contributions like social premiums, vacation pay, and sick leave. This provides a realistic view of true labor expenses.
📚 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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