Prime Cost vs Food Cost

 In 1. David Scott Peters, budget, Food Costs, Operations, SMART Systems, The Numbers, Video Blog

What is prime cost vs food cost? Do you wonder where the numbers that make up prime cost come from? Where does food cost fit into the prime cost calculation? How does the prime cost calculation work? Are controllable expenses the same as prime cost? Watch this video (or read below) to answer all of these questions.

If you don’t know your restaurant’s prime cost, how to calculate it and how to set your targets, you could be losing tens, if not hundreds, of thousands of dollars per year.

One key question is what is prime cost vs food cost. In the video above, I give you the numbers that make up prime cost, how to calculate prime cost, the target prime cost for all restaurants and the mistakes most restaurant owners are making, plus how to fix those mistakes. For quick reference here is the prime cost calculation:  (your total cost of goods sold (food, NA beverage, liquor, bottle beer, draft beer and wine cost) plus your total labor cost including taxes, benefits and insurance.

Once you know the prime cost calculation, you can start making changes to decrease either your food cost or labor cost to get your prime cost in line. That’s prime cost vs food cost. Then you can start making money in your restaurant!

In this video, David will cover how to get your food cost, why inventory is important, what salaries to include in your calculation, plus the correct sales numbers to use in your calculation.

When all is said and done, most restaurants have a 10-point swing they can make by taking steps to lower their prime cost. Of course, your restaurant isn’t average, so you’ll want to take your own circumstances into consideration. However – 10 points are yours if you want them.

If you want to learn more about prime cost vs food cost vs labor cost vs fixed or variable expenses, read our free special report, Breaking Away from the Insanity: How to easily take control of your restaurant and make more money. Download it here. Be sure to visit our YouTube channel for more helpful restaurant business management video tips. 

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