Guides / Restaurants

Prime cost: the one number that says if you survive

Food plus labour as a share of sales. Under 60% and you have room. Over 65% and the rent is eating you.

4 minute readUpdated September 21, 2026

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Check your prime cost

Prime cost is your two biggest controllable costs added together, food and drink plus labour, as a percentage of sales. Rent is fixed. Power is mostly fixed. Prime cost is the part you can actually move this week.

The formula

Prime cost % = (cost of goods + total labour including payroll taxes and benefits) ÷ sales × 100. Use the same period for all three numbers. A week is ideal; a month is fine.

The bands

Under 60%

Healthy. What is left covers rent, power, insurance, and leaves real profit.

60% to 65%

Tight. You are probably profitable on paper and broke in the bank. One slow month hurts.

Over 65%

Losing money once rent is paid, in almost every location. Fix it before anything else.

Worked example
A $60,000 month
Food and drink
$19,800 (33%)
Labour, all in
$17,400 (29%)
Prime cost
62%

Verdict Barely. Find $1,200 a month and you are back under 60%.

Where the fix usually is

  • Food side: the three or four plates that are over target and sell a lot. Fix those first.
  • Labour side: the two slowest shifts of the week. Schedule to sales, not to habit.
  • Both: check it weekly. Monthly is too late to change the schedule.
  • Do not cut quality to fix prime cost. Cut waste, cut dead hours, and reprice what is underpriced.

Now do it with your numbers.

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Check your prime cost