Why prime cost is the number
Food and labor are the two costs a restaurant controls week to week and the two that scale with sales. Everything else, rent, insurance, utilities, marketing, loan payments, is either fixed or slow to change. So prime cost = COGS + labor, and prime cost % = prime cost ÷ total sales, is the earliest and most honest read on whether the operation is working. If prime cost is 60%, 40 cents of every dollar is left for occupancy, operating costs and profit. At 70%, it's 30 cents, and with rent at 6–10% and the average full-service restaurant netting 3–5%, there's nothing left.
Benchmarks
| Segment | Prime cost target | Labor share (guidance) |
| Quick service | 55–60% | 20–25% |
| Fast casual | 58–63% | 25–30% |
| Full service | 60–65% | 28–35% |
| Fine dining | 60–68% | 30–38% |
Those are targets from operations consultants and POS vendors (7shifts, Restaurant365, MarketMan, Toast all land on "about 60%"). The survey reality is tougher. The National Restaurant Association's 2025 Operations Data Abstract, covering 2024, reports median food and non-alcoholic beverage cost of 32.0% for full-service restaurants and median labor including benefits of 36.5%, a median prime cost near 68%. Among full-service operators who were profitable, labor was 34.2%; among those losing money, 42.9%. In other words, an eight-point labor gap separated the profitable operators from the rest.
How to read your result
The calculator splits prime cost into its food and labor halves and compares each to the guidance range for your segment, then shows the dollar gap to 60%. Three patterns:
- Food high, labor fine. Pricing, portions or waste. Run the food cost calculator with a theoretical figure to size the waste; reprice with menu engineering.
- Labor high, food fine. The 2024 pattern. Schedule to hourly sales forecasts, cut the first and last hour where you're staffed for a rush that hasn't started or has ended, cross-train so one body covers two stations at 3 pm, and look at salaried overhead per location.
- Both high. Usually a sales problem, not a cost problem: the same crew and the same kitchen would be at 60% with 15% more revenue. Check average, table turns and marketing come before cutting.
The 60% arithmetic
On $120,000 of monthly sales, each point of prime cost is $1,200 a month, $14,400 a year. Moving from 66% to 60% is $7,200 a month, which is roughly one full-time position, or a 10% price increase across the menu with no volume loss, or 10% more sales at the same cost base. Seeing the options as dollars is the point of the calculator: it's easier to decide between "raise pizza prices $1" and "cut 40 labor hours a week" when both are written as $2,000.
What sales do I need to break even? →
Frequently asked questions
What is prime cost?
COGS (food and beverage) plus total labor, as a percentage of sales.
What's a good prime cost?
About 60%: QSR 55–60%, fast casual 58–63%, full service 60–65%, fine dining up to 68%.
Does labor include the owner's pay?
If you work in the operation, yes; that's what a buyer or lender would assume.
What labor % is normal?
NRA 2024 medians with benefits: 36.5% full service, 31.7% limited service. Profitable full-service operators: 34.2%.
Is alcohol in prime cost?
Yes, all COGS. Track it separately as pour cost too (18–24% target).
How often should I calculate it?
Weekly. A monthly prime cost tells you what happened; a weekly one lets you change the schedule.
Sources
- National Restaurant Association: Elevated labor costs had a significant impact on restaurant profitability in 2024 (median labor 36.5% FSR, 31.7% LSR).
- National Restaurant Association: Median food cost ratios, 2024.
- 7shifts: Restaurant prime cost guide (55–65% by segment).
- Restaurant365: How to calculate prime cost in a restaurant.
- MarketMan: Restaurant prime cost.
- Toast: Average restaurant profit margin (3–5%).