Restaurant prime cost: formula, target and calculator
By mise · Updated September 29, 2026
Quick answer: prime cost = cost of goods sold + total labor cost (wages, payroll taxes and benefits). Divided by total sales, most full-service restaurants target 60% or less and quick service up to 65%. It is the biggest controllable cost, so it is the first number to review each week.
Food and labor together are usually two thirds of a restaurant's costs. Prime cost puts them in one number so you can see the trade-off between them.
The formula
Targets
| Concept | Prime cost target |
|---|---|
| Full-service restaurant | 55–60% |
| Fast casual / quick service | 60–65% |
| Bar-heavy concept | 50–55% |
What to include in labor
All wages and salaries (front and back of house, managers), payroll taxes, workers' comp, health insurance and other benefits. Leave out owner draws unless the owner works a paid role.
Bringing it down
- COGS side: weekly counts, variance review, waste log, recipe costing and menu engineering.
- Labor side: schedule to forecast covers, cross-train, cut idle hours at open and close.
mise gives you the COGS half from your counts and invoices.
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Frequently asked questions
What is prime cost in a restaurant?
Cost of goods sold plus total labor cost, usually shown as a percentage of sales.
What should prime cost be?
About 55–60% of sales for full-service restaurants and up to 65% for quick service.
Does prime cost include rent?
No. Rent, utilities and marketing are occupancy and operating costs, outside prime cost.