Restaurant Prime Cost Calculator

Every experienced restaurant operator knows the number. Prime cost is what it costs you in food and labor to run your kitchen, as a percentage of what you bring in. Industry rule of thumb: keep it under 60% or you are probably not making money.

What Prime Cost Is and Why It Matters More Than Food Cost Alone

Food cost tells you whether your kitchen is spending the right amount on ingredients. Prime cost tells you whether your restaurant can actually make money. The formula is simple: Food Cost + Beverage Cost + Total Labor Cost. Divide by revenue. That percentage is your prime cost.

The reason prime cost matters more than food cost alone is that the two largest costs in any restaurant -- food and labor -- almost always trade off against each other. A fast casual operator with a streamlined menu might run 28% food cost but 37% labor cost, for a prime cost of 65%. A fine dining restaurant with 40% food cost might run only 28% labor, for a prime cost of 68%. Looking at food cost alone misses the full picture. Prime cost shows both at once.

The Formula in Plain Language

Prime Cost = (Food COGS + Beverage COGS) + (W-2 Wages + Payroll Taxes + Benefits)

Prime Cost Percentage = Prime Cost / Total Revenue x 100

Using the default scenario in this calculator: Revenue $30,000, Food $9,000 (30%), Beverage $1,500 (5%), Wages $6,750 (22.5%), Payroll Taxes $900 (3%), Benefits $350 (1.2%). Prime Cost = $18,500. Prime Cost Percentage = 61.7%. That is $510/month above the 60% QSR target, or $6,120/year.

Segment Benchmarks by Restaurant Type

The 60% rule of thumb is a starting point, not a universal target. Your benchmark depends on your format:

Sources: National Restaurant Association 2026, Toast POS benchmark data, Restaurant365 2026, Eagle Rock CFO 2026.

The Four Levers

1. Food cost reduction. Tighter portioning, reduced waste, better purchasing contracts, or a menu simplification that reduces SKU count. This is usually the first lever QSR and fast casual operators reach for because it does not affect the team.

2. Beverage cost reduction. For alcohol-serving restaurants, beverage cost is often the softest target. Menu engineering, speed pourers, and inventory controls on high-value spirits can reduce beverage cost 2-3 percentage points without reducing guest experience.

3. Labor cost reduction. Scheduling optimization, cross-training, and reducing overtime are the primary tools. Cutting labor below sustainable levels increases turnover cost and often pushes prime cost back up within a quarter. The lever is efficiency, not headcount cuts.

4. Revenue increase. Increasing average ticket or table turns brings prime cost down without touching a dollar of cost. A $2 menu price increase on your top sellers can close a 1-2% prime cost gap at most volume levels.

Real-World Flags

Owner-operator labor: if the owner works the line, include a market-rate salary for their labor in the calculation, even if they are not formally paying themselves. Omitting it understates your true prime cost. This is one of the most common sources of "our numbers look fine" followed by "we ran out of cash."

Delivery platform fees: DoorDash, Uber Eats, and Grubhub commissions (typically 15-30% of delivery revenue) are NOT labor cost for prime cost purposes. They are a separate operating expense. Including them in labor inflates your prime cost and misidentifies the problem.

Seasonal swings: resort and seasonal concepts may see prime cost swing 5-10% between peak and off-peak periods. Compare against the same period last year, not against a different season. A 68% prime cost in January at a ski-town restaurant may be normal; the same number in July is a red flag.

2026 commodity context: food costs have risen sharply since 2020. If your prime cost is slightly above target, compare against peers in your segment and your own historical trend, not just the benchmark. Operating above 60% in a high-commodity-cost environment may be a market condition, not an operational failure.

The Prime Cost Triangle: Cluster G Tools

This calculator is the centerpiece of FigureNerd's Restaurant Operator Toolkit. The full triangle:

Frequently Asked Questions