What Is Prime Cost?
Prime cost is the sum of your Cost of Goods Sold (COGS) and your total labor costs for a given period. It represents your two biggest controllable expenses and is the single most important number a full-service restaurant operator should track weekly.
The Prime Cost Formula
Prime Cost = COGS + Total Labor Cost
To express it as a percentage:
Prime Cost % = (COGS + Total Labor) ÷ Total Revenue × 100
For example: if your weekly revenue is $40,000, your food and beverage cost is $14,000, and your total labor (wages, payroll taxes, benefits) is $13,000, your prime cost is $27,000 — or 67.5%.
What's a Healthy Prime Cost Percentage?
- Full-service restaurants: aim for 60–65%
- Quick-service concepts: can run closer to 55–60%
- Above 70%: a red flag that margins are being eroded
These targets leave enough room to cover occupancy, utilities, and still generate profit.
How to Calculate Each Component
COGS: 1. Start with your opening inventory value 2. Add all purchases received during the period 3. Subtract your closing inventory value
COGS = Opening Inventory + Purchases − Closing Inventory
Total Labor Cost: Include all hourly wages, salaried management, payroll taxes, and any benefits paid during the same period. A common mistake is omitting owner draws or manager salaries — include them for an honest picture.
Why Weekly Tracking Beats Monthly
Monthly prime cost reviews are too slow to catch problems. A bad ordering week or an over-scheduled weekend can quietly kill a month's profit. Tracking weekly lets you course-correct in real time — adjust a vendor order, cut a shift, or address a portion-control issue before it compounds.
Where Operators Lose Accuracy
- Forgetting to log mid-period deliveries
- Missing credit memos from vendors
- Separating food and beverage COGS inconsistently
- Using scheduled hours instead of actual clock-out data for labor
How Hubstaurant Automates Prime Cost Tracking
Hubstaurant reads your vendor invoices automatically to update ingredient costs and COGS in real time — no manual entry after each delivery. Labor data pulls directly from scheduling and clock-in records, so your prime cost dashboard is always current. Food-cost analytics and per-server performance data sit in the same system as your POS reporting, giving you a complete picture without stitching together separate apps.
If you're currently managing inventory in one tool, scheduling in another, and pulling POS exports manually, Hubstaurant consolidates that into one system designed to do the work for you.
Ready to see your prime cost update automatically? Start a free trial with Hubstaurant and spend less time on spreadsheets and more time running your restaurant.