Prime cost is the combination of food cost and labor costs - together your two biggest expenses. Many restaurant owners only look at food cost, but forget that a chef earning €25 per hour also affects your profitability. By monitoring prime cost weekly you get a more complete picture of your operational efficiency.
What exactly is prime cost?
Prime cost is the sum of your food cost and labor costs, expressed as a percentage of your revenue. It gives you insight into your two biggest cost categories at the same time.
💡 Example:
Restaurant with €15,000 weekly revenue:
- Food cost: €4,500 (30%)
- Labor costs: €6,000 (40%)
- Prime cost: €10,500 (70%)
This restaurant has €4,500 left for all other costs and profit.
Why prime cost matters more than food cost alone
Food cost only tells half the story. You can have a perfect food cost of 28%, but if your labor costs are 50%, you're still not making money.
- Food cost: shows the efficiency of your kitchen and purchasing
- Labor costs: show the efficiency of your operations and scheduling
- Prime cost: shows the total efficiency of your business
⚠️ Watch out:
A low food cost of 25% means nothing if your labor costs are 55%. Then your prime cost is at 80% - way too high to be profitable.
Benchmark: what is a healthy prime cost?
A typical prime cost for restaurants is between 60% and 70% of your revenue. Above 70% it becomes difficult to remain profitable.
- Fine dining: 65-75% (more staff per guest)
- Casual dining: 60-70%
- Fast casual: 55-65% (less staff per guest)
- Delivery/takeout: 50-60% (no table service)
Monitor prime cost weekly
Check your prime cost every week, not just monthly. Weekly monitoring helps you adjust faster if something goes wrong.
💡 Example weekly check:
Week 12 results:
- Revenue: €18,000
- Food purchases: €5,400 (30%)
- Labor costs: €7,200 (40%)
- Prime cost: €12,600 (70%)
Last week it was 68%. What changed? More staff scheduled? More expensive ingredients?
How prime cost helps you make decisions
Prime cost gives you concrete steering information for daily decisions:
- Staff scheduling: how many hours can you schedule based on expected revenue?
- Menu engineering: which dishes are profitable when you factor in all costs?
- Pricing: are your prices high enough for your cost structure?
💡 Example decision:
Quiet Tuesday evening expected: €3,000 revenue
- Target prime cost 65% = €1,950
- Food cost 30% = €900
- Budget for labor: €1,050
- At €25/hour = maximum 42 hours to schedule
More staff = prime cost too high = loss on that evening.
How do you calculate prime cost? (step by step)
Gather your food cost for the week
Add up all your ingredient purchases. Not the inventory, but what you actually purchased this week. Include beverages if you categorize them as food.
Calculate your total labor costs
Add up all labor costs: gross wages, employer contributions, vacation pay, and any sick leave payouts. Don't forget yourself as owner-operator - calculate a realistic hourly rate for your own time.
Divide by your weekly revenue and multiply by 100
Prime cost % = ((Food cost + Labor costs) / Revenue) × 100. Use your revenue excluding VAT for an accurate picture. Anything above 70% is a signal that you need to adjust.
✨ Pro tip
Check your prime cost separately on your busiest and quietest day of the week. If the difference is more than 15 percentage points, you can probably schedule more efficiently.
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
Should I count myself as owner in labor costs?
Yes, calculate a realistic hourly rate for your own time. If you work 50 hours at €25/hour, add €1,250 per week to your labor costs. Otherwise your prime cost looks artificially low.
What if my prime cost is above 70%?
Then you're probably losing money. First check if your calculation is correct, then look at where you can save: schedule fewer staff, work more efficiently, or raise prices.
Does prime cost differ by season or day of the week?
Yes, that's normal. Quiet days often have higher prime cost because you have fixed labor costs. Monitor the trend over several weeks, not per day.
How often should I calculate prime cost?
Weekly gives you the best steering information. Daily has too much fluctuation, monthly is too slow to adjust if something goes wrong.
Can I have prime cost calculated automatically?
Yes, if you track your purchases and labor costs digitally. Apps like KitchenNmbrs can calculate your food cost automatically, you enter labor costs manually.
📚 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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