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Labour & prime cost

Prime Cost Calculator

What is my prime cost, and where is it coming from?

Prime cost is cost of goods sold plus all labour, divided by sales. It is the number most operators are measured on because it covers the two costs you can still change this week. Take these figures straight off one period's P&L.

Your figures stay here. The calculator runs on this device; the share link stores its numbers after the # in the URL.
Worked answer72.4%See it ↓
01

Your numbers

A worked example is already loaded. Replace any field with the figures from the source named beside it.

Total salesP&L or POS period report
$148,000.00

Net sales for the period, excluding sales tax.

Food costP&L
$34,000.00

Cost of food sold for the period.

Beverage costP&L
$19,500.00

Cost of beverage sold for the period, including beer, wine, and spirits.

Hourly wagesPayroll export
$31,000.00

Gross hourly payroll for the period, before taxes and benefits.

Salaried and managementPayroll export
$14,500.00

Gross salaried payroll for the period, including managers and owners drawing a wage.

Payroll taxes and benefitsPayroll export
$8,200.00

Employer payroll taxes, workers' compensation, insurance, and benefits. Leaving this out is the most common way prime cost gets understated.

02

The answer

Prime cost

72.4%

$107,200 of prime cost on $148,000 in sales

  • Prime cost$107,200
  • Left for everything elseWhat remains to cover rent, utilities, marketing, debt, and profit.$40,800
  • Cost of goods sold$53,500
  • Cost of goods, % of sales36.1%
  • Food cost, % of sales23.0%
  • Beverage cost, % of sales13.2%
  • Total labour$53,700
  • Labour, % of sales36.3%
  • Payroll burden as % of wages18.0%

Prime cost, % of sales

Operator survey
  • Limited-service restaurant (reported directly by the association)65%
  • Full-service restaurant (food 32.0% + labour 36.5%, added by us)68.5%

Reported by operators to an industry association and published as a median.

This figure is derived rather than reported directly.

The limited-service figure is published directly. The full-service figure adds two separately reported medians, which is not itself a median: the operator at the median on food is usually not the operator at the median on labour. Treat it as a rough marker, not a survey result.

Source: National Restaurant Association, 2025 Restaurant Operations Data Abstract (2024 data, 900+ operators) — limited-service prime cost and full-service labor (2025)

Source: National Restaurant Association, 2025 Restaurant Operations Data Abstract (2024 data, 900+ operators) — full-service food cost component (2025)

03 Show the arithmetic
Cost of goods sold = food cost + beverage cost
Total labour = hourly wages + salaried wages + payroll taxes and benefits
Prime cost = cost of goods sold + total labour
Prime cost % = prime cost ÷ total sales × 100
04 What the answer leaves out
  • Use the same period for every figure. Mixing a monthly P&L with a weekly payroll run produces a meaningless ratio.
  • Use net sales excluding sales tax. Including tax inflates the denominator and flatters the result.
Continue if it helps

The number is the start of the decision.

story Read the ten-minute closeoutTurn a vague shift recap into five observations that can actually change the next service. venue product See the operating metricsRead the plain-English definitions behind capacity utilization, sales per capacity-hour, RevPASH, prime cost, labor, and break-even.
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01 Labour Cost & Sales Per Labour HourLabour percentage, sales per labour hour, and cost per hour worked. 02 True Cost of an EmployeeWhat an hourly employee costs once taxes and insurance are counted. 03 Overtime Cost CalculatorWhat overtime costs against hiring another person.