What's a healthy prime cost for restaurants & food service?
Short answer
For restaurants & food service, a healthy prime cost is around ≤ 60%. It's the range most lenders, acquirers, and consultants use as the "healthy" band for restaurants & food service.
Real peer data
Community median publishes once we have 5+ anonymous submissions from restaurants & food service. Currently at 0. Run your numbers below to help build it — your ratios are shared, your business name and dollar amounts are not.
Formula
Prime Cost (%) = (Food Cost + Labor Cost) / Revenue × 100
Add cost of food sold and total labor cost (wages + payroll taxes + benefits). Divide by revenue. Multiply by 100.
Why prime cost matters for restaurants & food service
Prime cost is the master KPI in restaurants. Most operators target ≤ 60% prime cost. Above 65% and rent, utilities, marketing, and management have to be funded from less than 35% of revenue — and there's usually nothing left for the owner.
Understanding your prime cost in the context of restaurants & food service lets you see whether you're mid-pack, exceptional, or at risk — before your bank or accountant tells you.
People also ask
Common questions about prime cost for restaurants & food service
What is a good prime cost for restaurants & food service?+
For restaurants & food service, a healthy prime cost is around ≤ 60%. The exact number depends on scale, region, and business model, but this is the range most banks, acquirers, and industry consultants treat as "healthy."
How is Prime Cost calculated?+
Add cost of food sold and total labor cost (wages + payroll taxes + benefits). Divide by revenue. Multiply by 100.
Why does prime cost matter more for restaurants & food service?+
Prime Cost is one of the top metrics used to underwrite restaurants & food service. Lenders, buyers, and even landlords tend to check it before signing anything.
What's the fastest way to improve my prime cost?+
Run your numbers through CFO Grade — the free memo pinpoints the two or three levers that move prime cost fastest for a business your size, in your industry. Common fixes for restaurants & food service include pricing, cost discipline, and cash-cycle tightening in that order..
See your prime cost — graded against restaurants & food service peers.
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