The short version
In 2025, target a prime cost of 55–62% of sales depending on your concept. Most independent restaurants run 63–68%. Every single point above target on $1M in annual sales costs you $10,000 in lost profit.
The real math: what prime cost actually includes
Prime cost = Cost of Goods Sold (food + beverage + paper) + Total Labor Cost (wages + taxes + benefits + payroll fees). It does not include rent, utilities, marketing, or insurance.
- Food & beverage COGS: typically 25–35% of sales in 2025 (up ~29% YoY for many operators).
- Labor: typically 25–40% of sales (up ~23% YoY due to wage pressure).
- Combined target: 55–62% for healthy independents; under 60% to truly thrive.
Example: $800,000 annual sales at 65% prime cost = $520,000 in direct costs. At 58% = $464,000. That $56,000 difference is real money you keep.
Factors pushing prime cost higher in 2025
Inflation, labor shortages, and supply chain issues are real. These are the biggest drivers:
1. Food cost creep
- Proteins and produce up 25–35% in many markets.
- Waste and portion inconsistency add another 3–6%.
2. Labor cost pressure
- Minimum wage increases and overtime in many states.
- Overstaffing slow shifts or poor scheduling (common 8–12% leak).
3. Inefficient operations
- No weekly prime cost tracking (most operators only see it monthly on the P&L).
- Missing menu engineering or recipe costing updates.
Quick prime cost audit you can run today
Takes under 15 minutes with last month’s numbers:
Step 1: Gather your data
- Food & beverage purchases + beginning/ending inventory = COGS.
- Total payroll (including taxes and benefits) from your processor or accountant.
- Total sales (food + beverage) from your POS or bank deposits.
Step 2: Run the numbers
- Prime cost $ = COGS + Labor $.
- Prime cost % = (Prime cost $ ÷ Total sales) × 100.
- Compare to target. Over 62%? Action needed now.
Step 3: Identify the leak
- Food over 32%? Check waste logs and yields.
- Labor over 32%? Review schedules against sales forecasts.
How to lower prime cost without cutting quality
Smart operators reduce prime cost 4–8 points in the first 60–90 days with these moves:
- Track weekly. Run the calculator every Monday—catch problems before they hit the P&L.
- Optimize scheduling. Match labor hours to projected sales; many save 5–10% here alone.
- Menu engineering. Promote high-margin items and retire dogs—can improve food cost 2–4 points.
- Recipe costing & yields. Update cards and run yield tests on proteins quarterly.
Plug your real numbers into our free Prime Cost Calculator and the Menu Pricing Formula cheat sheet from our templates library for a fast start.
Where the RPS tools plug in
The calculator is powerful on its own. Pair it with the rest of the stack to stay honest as costs move:
- Prime Cost Calculator: Weekly snapshot of food + labor efficiency.
- Recipe Cost Card: Accurate portion costs so your food % is real, not guessed.
- Labor Planner: Build schedules that hit your labor target before the week starts.
- Live Menu Engine service: Automatically re-prices your menu as ingredient and labor costs change.
If you’re comparing DIY spreadsheets and live systems to the big all-in-one restaurant platforms, our Us vs Them page breaks down why Restaurant Profit Systems is different.
Simple next step for this week
Pull last month’s numbers and run them through the Prime Cost Calculator. If you’re over 62%, pick one lever—scheduling or waste tracking—and fix it this week. Even a 2-point drop on $750k sales puts $15,000 back in your pocket annually.
FAQs
What is a restaurant prime cost calculator?
A restaurant prime cost calculator combines your cost of goods sold (food and beverage) with total labor costs (wages, taxes, benefits, and payroll fees) and shows the result as a percentage of sales. This single number is the strongest predictor of profitability—stronger than food cost or labor cost alone. In 2025, operators who track prime cost weekly instead of monthly catch issues 3–4 weeks earlier and protect an extra $8,000–$15,000 per year on a $750k restaurant.
What should my restaurant's prime cost percentage be in 2025?
Aim for 55–62% of total sales for most independent concepts. Quick-service and fast-casual restaurants can often hit 55–60%, while full-service casual typically targets 60–62%. Anything consistently above 65% usually means you're barely breaking even or losing money after rent and utilities. The next step is to run last month’s numbers in our free calculator and compare—then focus on the bigger of your food or labor variance.
How do I calculate my restaurant's prime cost?
Add your food and beverage cost of goods sold (beginning inventory + purchases – ending inventory) to your total labor cost for the same period, then divide by total sales and multiply by 100. Example: $28,000 COGS + $26,000 labor = $54,000 prime cost ÷ $90,000 sales = 60%. Do this weekly using the last four weeks of data for the clearest picture. Our calculator automates the math and flags whether you're trending up or down.
Why is my restaurant's prime cost so high?
The most common causes in 2025 are food waste/portion creep (adds 3–6 points), overstaffing or inefficient scheduling (adds 5–10 points on labor), and outdated menu pricing that no longer covers current ingredient and wage costs. On a $1M restaurant, running at 67% instead of 60% costs you $70,000 annually. Start by running a weekly prime cost report and a yield test on your top three proteins—this alone often reveals $2,000–$4,000 in monthly leaks.
How can I lower my restaurant prime cost quickly?
Focus on the two biggest levers: labor scheduling and menu engineering. Build next week’s schedule against projected sales using our Labor Planner (many operators drop 4–8% here). Then run the Recipe Cost Card on your top 10 items and promote the high-margin ones while adjusting or removing low performers. Track prime cost every Monday and re-run the calculator after each change—most restaurants see a 3–5 point improvement in the first 30–45 days.