Prime cost = food cost + labor cost. It typically represents 55–65% of total revenue in a well-run independent restaurant. Operators tracking prime cost monthly can identify structural issues: rising food costs may signal supplier drift, while rising labor costs may indicate scheduling inefficiency. Industry consensus holds that prime costs above 65% leave minimal margin for fixed costs and profit. MenuMargin focuses on the food cost half of this equation but supports the full calculation by enabling manual labor cost entry alongside automated food cost data.
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Prime Cost
The combined total of food and labor costs, a primary driver of restaurant profitability and operational health.
Related terms
- Food Cost Percentage — The ratio of ingredient cost to menu price, expressed as a percentage. A key profitability benchmark.
- Plate Cost — The total ingredient cost for a single prepared menu item, calculated from the cost per ingredient portion.
- Labor Cost Percentage — Total labor expense (wages, payroll tax, benefits) divided by total revenue. A core operating ratio.