Total revenue for the period (weekly or monthly)
Cost of Goods Sold (COGS)
Labor Costs
Enter your sales and cost figures, then click calculate.
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Introduction
Most restaurant failures are not caused by bad food or poor location. They are caused by prime cost that quietly exceeds 70% of revenue while the operator focuses on the dining room rather than the P&L. Prime cost -- the combined total of food and beverage costs plus all labor expenses -- is the single most predictive metric in restaurant finance. According to Toast's Restaurant Industry Report, restaurants with prime costs above 65% of revenue have a 62% higher probability of closing within 24 months than those operating below 60%. The difference between a 60% and 68% prime cost on a $1.2M annual revenue restaurant is $96,000 per year -- the difference between profit and permanent red ink. This prime cost calculator pulls COGS and labor together into a single weekly or monthly view so operators can act on the number before it becomes a crisis.
What This Calculator Does
This restaurant prime cost calculator computes prime cost percentage by combining cost of goods sold (food and beverage COGS) with total fully-loaded labor costs (wages, salaries, overtime, payroll taxes, and benefits), then benchmarks the result against 2026 industry standards by restaurant type. It also calculates the dollar amount available for all other operating expenses after prime cost is covered.
The Formula
COGS includes all food and beverage purchases adjusted for inventory change: Opening Inventory + Purchases - Closing Inventory. Total labor includes hourly wages, salaried management, overtime, employer payroll taxes (FICA, FUTA, SUTA typically 10% to 12% of gross wages), workers compensation insurance, health benefits, and any other payroll-related expenses. Prime cost percentage expresses what share of every revenue dollar is consumed by the two largest controllable costs. The remainder after prime cost must cover rent, utilities, marketing, repairs, and profit.
Step-by-Step Example
Calculate weekly COGS from inventory
Opening food inventory: $8,200. Purchases: $14,500. Closing inventory: $7,900. Food COGS: $8,200 + $14,500 - $7,900 = $14,800. Beverage COGS: $3,100. Total COGS: $17,900.
Calculate fully-loaded labor
FOH wages: $9,200. BOH wages: $7,800. Management (salaried): $3,500. Overtime: $680. Payroll taxes (11%): $2,332. Benefits: $1,100. Total labor: $24,612.
Calculate prime cost and percentage
Weekly revenue: $62,000. Prime cost: $17,900 + $24,612 = $42,512. Prime cost %: $42,512 / $62,000 = 68.6%.
Interpret and act
68.6% is above the 60% to 65% target for casual dining. Available for overhead: $19,488. If rent is $8,000, that leaves only $11,488 for utilities, marketing, repairs, debt service, and profit on $62,000 in sales -- a structurally tight operation. Labor needs to come down by $2,200 to $3,500 weekly to normalize.
Real-World Use Cases
Weekly Operator Dashboard
A restaurant owner tracks prime cost every Monday morning using Sunday's closing inventory and the prior week's payroll. When prime cost exceeds 65%, the week's scheduling and purchasing decisions come under immediate review before the problem compounds across 4 more weeks.
Acquisition Due Diligence
A buyer evaluating a restaurant acquisition asks for 24 months of weekly prime cost data. A consistent 63% prime cost in a well-run concept is very different from 58% for six months and 72% for the last quarter -- a pattern that may indicate seasonal collapse, management turnover, or food cost creep.
Multi-Unit Performance Comparison
A regional manager with eight casual dining locations uses the prime cost calculator to rank each unit weekly. The two highest-performing units are at 58% and 61%. The two most problematic are at 69% and 71%. The comparison focuses coaching time on the underperformers rather than averaging across the portfolio.
Comparison
| Restaurant Type | Target Prime Cost % | Max Acceptable | Typical COGS% | Typical Labor% |
|---|---|---|---|---|
| Quick Service (QSR) | 50-55% | 60% | 25-30% | 25-30% |
| Fast Casual | 55-60% | 65% | 28-32% | 27-32% |
| Casual Full Service | 58-63% | 68% | 28-33% | 30-35% |
| Fine Dining | 58-65% | 70% | 32-38% | 28-35% |
| Bar / Nightclub | 48-55% | 62% | 18-24% | 28-35% |
| Catering | 55-62% | 68% | 28-35% | 25-30% |
Common Mistakes to Avoid
Calculating prime cost monthly instead of weekly. Monthly reporting catches a problem 3 to 4 weeks after it starts. Weekly tracking identifies a food cost spike or overtime surge in time to correct it before the month ends at a loss.
Not including all labor costs in the calculation. Many operators calculate labor using only hourly wages and miss salaried management, employer payroll taxes (10% to 12% of gross wages), workers compensation, and benefits. Understating labor by 8% to 12% produces a false prime cost that does not reflect the true cost of running the operation.
Comparing prime cost to the wrong industry benchmark. A bar with 22% beverage COGS and 32% labor is healthy at 54% prime cost. Comparing that to a full-service restaurant benchmark of 60% makes it appear to have unnecessary room -- it does not, given the different operating model.
Ignoring the COGS-labor split within prime cost. Two restaurants at 63% prime cost can have very different problems. One at 38% COGS and 25% labor has a food purchasing problem. The other at 28% COGS and 35% labor has a scheduling problem. The total prime cost looks the same; the solutions are completely different.
Frequently Asked Questions
Accuracy and Disclaimer
Prime cost benchmarks are 2026 industry averages and vary by concept, location, menu mix, and market. This calculator is for operational planning purposes. Actual prime cost depends on accurate COGS calculation from physical inventory counts and fully-loaded labor tracking. Consult a restaurant accountant or operations advisor for benchmarks specific to your concept and market.
Conclusion
Prime cost is the single number every restaurant operator must know every week. Track it consistently, benchmark it against the targets in this calculator, and act quickly when it drifts above your ceiling. For the full labor picture, use our Labor Cost Percentage Calculator to break labor down by FOH and BOH, or run the Table Turn Rate Calculator to see whether revenue-per-seat improvements can offset labor pressure without cutting headcount.
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