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Prime cost is cost of goods sold plus labor — the two costs you can actually move week to week. It is the first number a serious operator looks at, because rent is fixed, but prime cost answers to portioning, scheduling and pricing.
The industry line is 60%: prime cost at or under 60% of sales leaves enough gross profit to pay rent, utilities and still keep 10–15% for the owner. Between 60–65% is a warning zone — fixable with tighter prep lists and schedules. Past 65%, the restaurant is one slow month from trouble.
Keep going with these tools — they build on this calculation: Food Cost Percentage Calculator, Labor Cost Calculator, Restaurant Profit Margin Calculator and Restaurant Break-Even Calculator. When your prices look right, print the menu with the Menu Maker — free templates, PDF & PNG. Want us to set the whole system up for you? Ask about concierge setup.
Cost of goods sold (food and beverage purchases) plus total labor cost (wages, payroll taxes, benefits). It is the controllable heart of a restaurant's P&L and typically should sit at or below 60% of sales.
Because everything else — rent, utilities, insurance, marketing, profit — has to fit in the remaining 40%. When prime cost creeps past 65%, almost no rent bill works anymore.
Two levers, two weeks each: (1) food cost — weigh portions, count waste, reprice the five worst cost-performers; (2) labor — rebuild the schedule against your actual sales curve and cut overtime. Do both before touching prices.