What Is Prime Cost?
Prime cost is the single most important profitability metric in a full-service restaurant. It combines your two largest controllable expenses: Cost of Goods Sold (CoGS) and Total Labor Cost (wages, payroll taxes, and benefits). Together they typically consume 55–65% of revenue — leaving the remaining percentage to cover rent, utilities, and profit.
The Formula
``` Prime Cost = CoGS + Total Labor Cost Prime Cost % = Prime Cost ÷ Total Revenue × 100 ```
Most healthy full-service restaurants target a prime cost percentage below 60%. Quick-service concepts often run lower; upscale full-service can push higher if check averages support it.
Worked Example
| Line Item | Amount | |---|---| | Weekly Food & Beverage CoGS | $18,400 | | Weekly Labor (wages + taxes) | $14,200 | | Prime Cost | $32,600 | | Weekly Revenue | $56,000 | | Prime Cost % | 58.2% |
At 58.2%, this operator has roughly 41.8% of revenue left to cover fixed costs and generate profit — a healthy position. Creep that number to 65% and the math gets painful fast.
Why Spreadsheets Fail This Metric
Calculating prime cost manually means pulling invoices, reconciling inventory counts, exporting payroll reports, and combining them in a spreadsheet — typically once a week at best. Tools like MarketMan or Restaurant365 handle pieces of this well, but they require you to assemble the full picture yourself across multiple logins.
How Hubstaurant Tracks Prime Cost Automatically
Hubstaurant reads your vendor invoices automatically to build purchase-driven inventory, so CoGS updates without manual entry. Its food-cost analytics module tracks cost per ingredient in real time. Labor data feeds directly from the built-in staff scheduling tool. Your prime cost percentage appears as a live dashboard figure — no exports, no spreadsheet, no end-of-week scramble.
Theft and leakage detection flags when actual CoGS drifts above theoretical cost, so margin erosion surfaces before it compounds. POS analytics layer revenue data on top, giving you a complete prime cost view tied to per-server performance and turn-time — context that standalone inventory apps simply don't provide.
One system replaces your inventory app, scheduling tool, and POS analytics add-on at a lower combined cost.
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*Ready to see your prime cost in real time? Start a free trial of Hubstaurant and stop chasing the number in spreadsheets.*