## Restaurant Prime Cost Calculation

What is the restaurant prime cost calculation? What numbers go into the prime cost calculation? Watch this video for an easy breakdown this number, which I call the most important number in your restaurant.

The one number all restaurants must know to be profitable is their prime cost. The prime cost calculation is made up the total cost of goods sold and labor cost.

So what is the prime cost equation? The prime cost calculation? It’s very simple. It’s total cost of goods sold plus total labor cost (including raw labor, taxes, benefits and insurance). Take that number and divide it by gross sales before discounts are taken out, not including sales tax.

That is the formula for restaurants.

So, you calculate your prime cost. Then what? Well, if your total prime cost is higher than 55% and you make \$850,000/year or more in sales, then you have room to trim, which is room for more profits.

How do you get to those additional profits? With systems that control your prime cost.

1. Budgets
2. Recipe costing cards