The #1 restaurant metric — see your combined food + labor cost as a percentage of revenue
💡 Why This Matters Prime cost — food + labor combined — is the single most important number in restaurant management, because these are the two costs an owner can actually control day to day. Most operators target 55–65% of revenue.
A high prime cost isn't always one problem — the COGS/labor breakdown above tells you whether to look at menu pricing and portion control, or at scheduling and staffing levels, since the fix for each is completely different.
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Prime cost = COGS + total labor cost. Prime cost percentage = (COGS + labor cost) ÷ revenue × 100. These two costs together typically make up 60-70% of every dollar a restaurant brings in, and unlike rent or insurance, they're the costs an owner can actually adjust week to week through menu engineering, portion control, and staff scheduling.
The combined percentage tells you how much of every revenue dollar goes to food and labor before you've covered rent, utilities, marketing, or profit. The separate COGS% and labor% breakdown matters just as much — a restaurant with high food cost needs different fixes (portioning, waste, supplier pricing) than one with high labor cost (scheduling, overtime, staffing levels).
| Prime Cost % | Assessment |
|---|---|
| Under 55% | Excellent — verify quality isn't being cut |
| 55–65% | Healthy range for most restaurants |
| 65–70% | Warning — margins getting squeezed |
| Over 70% | Generally unsustainable long-term |
The 55–65% band is a general restaurant-industry guideline, not a universal rule — fine dining, fast casual, and quick service concepts each run at different natural prime cost levels because of how much labor vs. ingredient cost their format requires. Use it as a starting benchmark, not a strict pass/fail line.
Track prime cost regularly, not just once — a single snapshot can be skewed by an unusual week. Use the reverse mode to sanity-check staffing decisions: before adding shifts or a new hire, check what labor budget your current food cost and revenue can actually support at your target percentage.
Forward example: A restaurant has $9,000 in monthly COGS, $8,500 in labor cost, and $28,000 in revenue. Prime cost = $9,000 + $8,500 = $17,500. Prime cost % = $17,500 ÷ $28,000 = 62.5% — squarely in the healthy 55–65% range. Breaking it down: COGS is 32.1% of revenue, labor is 30.4%.
Reverse example: Same $9,000 COGS and $28,000 revenue, but this time you want to hit a 60% target prime cost. Max total prime cost = $28,000 × 60% = $16,800. Max labor budget = $16,800 − $9,000 = $7,800.
Prime cost = COGS + total labor cost. Prime cost percentage = (COGS + labor cost) / revenue × 100. It's the single most important cost metric in restaurant management because these two costs are the ones you can actually control day to day.
Most operators target 55-65% of revenue. Below 55% is excellent — though worth double-checking quality isn't being cut. Above 65% starts squeezing margins, and above 70% is generally considered unsustainable long-term.
Multiply revenue by your target prime cost percentage to get your maximum total prime cost, then subtract your COGS — what's left is the labor budget you can afford while staying on target.