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Glossary

Prime cost

Prime cost
Food + beverage cost plus total labor — the single most-watched restaurant profitability number.

Prime cost is a restaurant’s food and beverage cost plus its total labor cost, added together — the single most-watched number in restaurant profitability, typically targeted around 60% of sales or below. It combines the two largest controllable expenses into one figure, which is why operators steer by it. It’s only honest, though, when both halves are real: true food cost from recipes and counts, and fully-loaded labor including employer taxes. A prime cost built on wages-only labor or a guessed food cost understates the truth.

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Where these figures come from

  • National Restaurant Association, Operations Data — Food and beverage cost runs about 32% of sales and labor about 30%. The 60%-of-sales prime-cost target is those two added together — a derivation from published operating data, not a separately published benchmark, and it is stated that way here.

Industry benchmarks drift. Where a figure is a range, it is published as a range rather than rounded into false precision.

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