How To Calculate Prime Cost

The Prime Cost Formula

In any restaurant, prime cost is composed of food, beverage and labor costs. As a restaurant owner, you want to make sure to keep your prime cost below 65 percent. If you’re operating prime cost at 65%, then you are stating that 0.65 cents of each dollar goes towards food, beverage and labor costs. This does not include utilities, marketing cost, operational costs and rent. Monitoring your prime costs weekly will allow you to make adjustment before month end. For example, if you see your prime cost hit 75% in one week, then try to bring your prime costs down to 55% by adjust labor and reviewing purchasing.

Prime Cost Formula

Cost of Goods Sold (COGS) + Total Labor Costs = Prime Cost

Bookkeeping Chef On Prime Cost

This is a good resource to your financial questions and David Scott Peters does a great job of explaining prime cost and what it means to your business personally. Prime cost is different for everyone and you need to find what that number is for you.

Automating Prime Cost Reports

Keeping track of daily sales, purchase and payroll can drive a guy or gal mad. You want to automate this process and streamline your operations. Recipe Costing Software offers the ability to sync your data with any of our integrated restaurant point of sales systems. Use our software to enter your purchase orders and receive those purchases into inventory. Enter labor hours or sync it with Deputy software.

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