Prime Cost 101: A Weekly Habit That Saves Real Money

Why prime cost matters more than profit margin

Ask most restaurant owners how they’re doing, and they’ll mention sales.

Ask a great operator, and they’ll tell you their prime cost — food + labor.

Prime cost shows you what’s really happening behind the kitchen door.

It’s the one number that ties your menu pricing, staffing, and inventory decisions together.

The formula is simple:

Prime Cost = Cost of Goods Sold (Food + Beverage) + Labor (Wages + Payroll Taxes)

Aim for 60–65% of sales in a healthy full-service restaurant and 55–60% for quick-serve and fast-casual. Above those levels, something’s slipping — and it’s usually either over-portioning, waste, or overtime.

Why track it weekly

Waiting until month-end is too late. A weekly prime cost report helps you catch:

• Inventory creeping up faster than sales

• Food waste hidden in prep or spoilage

• Labor that spikes on slow nights

• Vendor pricing changes before they erode margin

Weekly tracking turns reaction into control.

How to start this week

• Pull your POS sales and vendor invoices

• Add up food and beverage purchases

• Add weekly labor cost (including taxes)

• Divide by sales — that’s your prime cost %

If you’re not already doing this, start with one location for four weeks. The trend line will tell you more than any financial statement.

Make it automatic

Steady Plate Accounting helps restaurant owners automate these reports so you see prime cost, variance, and menu profitability without extra spreadsheets.