Most restaurants underestimate what their new dishes actually cost by ignoring labor expenses. Prime cost combines ingredient costs with labor costs per dish, revealing the true expense of each menu item. You need this calculation before launching any new dish to avoid profit-killing surprises.
What exactly is prime cost?
Prime cost has two components:
- Food cost: all ingredients that go into the dish
- Labor cost: the labor costs for preparing that specific dish
The formula: Prime cost = Food cost + Labor cost per portion
💡 Example:
New pasta carbonara:
- Ingredients: €6.50
- Prep time: 8 minutes
- Kitchen hourly wage: €22.50
- Labor costs: (8/60) × €22.50 = €3.00
Prime cost: €6.50 + €3.00 = €9.50
Calculating labor costs per dish
Labor costs are where most calculations go wrong. Here's what you need:
- Prep time: how many minutes does this dish take?
- Kitchen hourly wage: what does an hour of kitchen work cost?
- Complexity: simple or many steps?
⚠️ Note:
Don't calculate based only on your chef's salary. Add employer contributions, holiday pay, and sick leave. Standard total: gross salary × 1.4
Determining your kitchen hourly wage
Calculate your average kitchen hourly wage this way:
- Total kitchen costs per month (including employer contributions)
- Divided by total hours worked in the kitchen
- This gives you your actual hourly wage
💡 Kitchen hourly wage example:
Restaurant with 2 kitchen staff:
- Chef: €3,200 gross + 40% employer contributions = €4,480
- Sous chef: €2,600 gross + 40% = €3,640
- Total per month: €8,120
- Hours worked: 360 hours/month
Kitchen hourly wage: €8,120 ÷ 360 = €22.56
Measuring prep time
For new dishes you'll need to time the preparation carefully:
- Mise-en-place: chopping, weighing, setting up
- Actual preparation: frying, cooking, assembling
- Plating: garnishing and making it ready to serve
Add up everything that's done specifically for this dish. Don't count general prep work like starting up the oven.
💡 Prep time example:
Grilled salmon fillet with vegetables:
- Season and grill salmon: 6 minutes
- Chop and sauté vegetables: 4 minutes
- Make sauce: 3 minutes
- Plating: 2 minutes
Total prep time: 15 minutes
Calculating prime cost percentage
Just like food cost, you calculate a percentage of the selling price:
Prime cost % = (Prime cost ÷ Selling price excl. VAT) × 100
Based on real restaurant P&L data, a typical prime cost for restaurants runs between 55% and 65%. Anything above 65% becomes difficult to make profitable.
⚠️ Note:
Always calculate with the selling price excluding VAT. A dish of €28.00 incl. VAT is €25.69 excl. VAT at 9% VAT.
Determining minimum selling price
Once you know what your prime cost should be, you can calculate the minimum selling price:
Minimum selling price = Prime cost ÷ (Desired prime cost % ÷ 100)
💡 Minimum price example:
New dish with prime cost of €12.50:
- Desired prime cost: 60%
- Minimum price excl. VAT: €12.50 ÷ 0.60 = €20.83
- Minimum price incl. VAT: €20.83 × 1.09 = €22.70
Menu price minimum: €23.00
How do you calculate prime cost? (step by step)
Calculate ingredient costs
Add up all ingredients that go into the dish, including oil, butter, spices, and garnish. Use actual purchase prices and account for waste with fresh products.
Measure prep time
Time all steps: mise-en-place, preparation, and plating. Test this at least 3 times to get an average, because the first time always takes longer.
Calculate labor costs per portion
Multiply the prep time (in hours) by your kitchen hourly wage. Formula: (prep time in minutes ÷ 60) × kitchen hourly wage per hour.
Add ingredients and labor costs
Prime cost = ingredient costs + labor costs per portion. This is your actual cost price including the time it takes to make the dish.
Determine minimum selling price
Divide your prime cost by your desired prime cost percentage (usually 55-60%). Don't forget to add VAT for the final menu price.
✨ Pro tip
Time your new dish preparation at least 8 times during the first 2 weeks before finalizing prime cost calculations. Prep time typically drops 20-30% as kitchen staff master the technique.
Calculate this yourself?
In the KitchenNmbrs app you can do this in just a few clicks. 7 days free, no credit card.
Was this article helpful?
Frequently asked questions
What is a good prime cost percentage?
For restaurants, a healthy prime cost runs between 55% and 65% of the selling price. Above 65% it becomes difficult to stay profitable after covering all other costs.
Do I need to count all prep time?
Only count time spent specifically on this dish. General kitchen prep like starting up ovens doesn't count toward individual dishes.
How do I determine my kitchen hourly wage?
Divide your total monthly kitchen costs (including employer contributions) by the number of hours worked. Calculate with gross salary × 1.4 for actual costs.
Why is prime cost more important than just food cost?
Prime cost gives you the complete picture of what a dish costs. Labor-intensive dishes can have low food cost but still be unprofitable due to high labor costs.
Do I need to include VAT in prime cost calculations?
No, always calculate with selling prices excluding VAT. Add VAT only after determining the final menu price. A dish of €24.00 incl. VAT is €22.02 excl. VAT.
Should I calculate prime cost differently for seasonal dishes?
Yes, factor in seasonal wage fluctuations and prep time changes. Summer dishes often take longer due to fresh ingredient prep, while winter dishes may require more cooking time.
📚 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.
Develop recipes with instant cost calculation
Every new recipe has a cost price. KitchenNmbrs calculates it while you build the recipe — so you know if it's profitable before it hits the menu. Try it free.
Start free trial →