Picture this: your food cost is perfect at 28%, but you're still bleeding money every month. The culprit? You're ignoring the other half of your biggest expenses - labor costs. Prime cost combines both food and labor costs, giving you the 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 captures your two biggest cost categories in one metric.
💡 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 beats food cost alone
Food cost only tells half the story. You can nail a 28% food cost, but if your labor runs 50%, you're still drowning.
- Food cost: shows kitchen and purchasing efficiency
- Labor costs: reveal operational and scheduling efficiency
- Prime cost: shows your total business efficiency
⚠️ Watch out:
A stellar 25% food cost means nothing if your labor hits 55%. That's 80% prime cost - way too high for profitability.
Benchmark: what's a healthy prime cost?
Most restaurants should target 60-70% of revenue for prime cost. Above 70%? You're in the danger zone.
- Fine dining: 65-75% (higher staff-to-guest ratio)
- Casual dining: 60-70%
- Fast casual: 55-65% (leaner staffing)
- Delivery/takeout: 50-60% (no table service)
Track prime cost every single week
Weekly checks beat monthly reports every time. From tracking this across dozens of restaurants, I've seen that weekly monitoring lets you course-correct before small problems become big losses.
💡 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 was 68%. What shifted? Extra staff hours? Premium ingredients?
How prime cost drives smarter decisions
Prime cost gives you real steering power for daily operations:
- Staff scheduling: how many hours can you afford based on projected revenue?
- Menu engineering: which dishes actually make money after all costs?
- Pricing strategy: do your prices support your cost structure?
💡 Example decision:
Slow Tuesday forecast: €3,000 revenue
- Target prime cost 65% = €1,950
- Food cost 30% = €900
- Labor budget: €1,050
- At €25/hour = max 42 hours to schedule
Schedule more staff? Your prime cost explodes and you lose money that night.
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
Track your prime cost separately for your 3 busiest days versus your 3 slowest days each week. If the gap exceeds 12 percentage points consistently, you can probably optimize your staffing schedule to save 2-4% on overall prime cost.
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?
Absolutely - calculate a realistic hourly rate for your time. If you work 50 hours at €25/hour, that's €1,250 weekly labor cost. Skip this and your prime cost looks artificially low.
What if my prime cost hits above 70%?
You're likely losing money. Double-check your calculations first, then tackle the problem: cut staff hours, boost efficiency, or raise prices. Something's got to give.
Does prime cost vary by day or season?
Yes, that's normal. Quiet days often show higher prime cost due to fixed labor needs. Track trends over several weeks, not individual days.
How do I handle prep cooks who work across multiple revenue days?
Allocate their hours based on the revenue they're prepping for. If your prep cook spends 6 hours Monday prepping for Tuesday service, count those hours against Tuesday's prime cost calculation.
Can prime cost be calculated automatically?
Yes, if you track purchases and labor digitally. Tools like KitchenNmbrs can automate food cost calculations while you input labor costs manually.
What's the biggest prime cost mistake restaurants make?
Ignoring the labor side completely. They obsess over food cost percentages while scheduling way too many staff hours. Both sides of the equation matter equally.
Should prime cost targets differ for lunch vs dinner service?
Smart operators do set different targets. Dinner typically allows for higher labor costs due to better margins, while lunch needs tighter prime cost control due to lower check averages.
📚 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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