Guide
Prime cost is the number that decides it.
Food cost alone will not tell you whether you are making money. Food plus labour will, and it is the figure most owners never calculate.
In short
Prime cost is cost of goods sold plus total labour, divided by sales. Common industry guidance puts a healthy prime cost between 55% and 65% of revenue, with rising wage costs pushing many operators toward the top of that range. One caveat for Irish and UK operators: most published benchmarks come from the US and exclude employer social charges, which add meaningfully on top of gross pay in Europe.
Updated 28 August 2026
The formula
Prime cost is cost of goods sold plus total labour, divided by sales for the same period. Cost of goods sold means opening stock plus purchases minus closing stock, not just your invoices. Total labour means everything: wages, employer contributions, holiday pay accrual, and the value of your own hours if you work the floor. Leaving your own labour out is the most common way a restaurant looks profitable and is not.
What a healthy number looks like
Industry guidance commonly puts a workable prime cost between 55% and 65% of revenue, and in the current wage environment many operators sit at the upper end. Below 55% is strong. Above 70% and the business is usually not viable without a change in either the menu or the rota. But treat these as orientation, not as targets: the right number depends heavily on format and on your rent.
- 55–65% is the range most guidance points at
- Under 55% is a genuinely strong position
- Over 70% rarely survives without structural change
- Compare to your own last quarter before comparing to anyone else
The European caveat nobody mentions
Almost every prime cost benchmark you will read online is American, and American labour figures typically exclude employer social charges. In Ireland and the UK, employer PRSI or National Insurance and holiday pay accrual sit on top of gross wages, so a like-for-like European prime cost naturally reads higher than a US one. If you are comparing yourself to a figure from a US blog, you are comparing two different measurements and you will conclude you are worse than you are.
Why food and labour move together
They trade off, which is why looking at either alone misleads. Prepping in house cuts food cost and raises labour. Buying prepared cuts labour and raises food cost. Neither is right or wrong, and a kitchen can move several points in either direction without changing its profit at all. Prime cost exists precisely because it nets that trade-off out.
Where to look when it is too high
Work in this order, because it goes from most to least likely. Labour scheduled against a rush you have misjudged is the most common cause, and most owners are wrong about their rush by about forty minutes at each end. Then portioning on the expensive lines. Then waste. Then supplier terms. Repricing the menu is last, not first, because it exports the problem to the customer and it is the only lever that can cost you volume.
- Rota against actual demand by hour, not by assumption
- Portion control on meat, fish, cheese and spirits
- Waste and remakes, which never appear on an invoice
- Supplier terms, reviewed rather than rolled over
Questions, answered straight.
Not covered here? Just ask us.
Should I include my own wages?
Yes, at what it would cost to replace you. A restaurant that only works because the owner is unpaid is not profitable, it is subsidised, and you will find that out when you try to step back or sell.
How often should I calculate it?
Monthly, because a real cost of goods sold needs a stock count. Weekly counts on high-value lines will tell you about a problem before the monthly number confirms it.
Does prime cost include rent?
No. Rent, rates, utilities and insurance sit below prime cost as fixed costs. Prime cost is deliberately the variable part, because it is the part you can move week to week.
My prime cost is fine but I am losing money. What now?
Then the problem is below the line: rent, debt, or simply not enough volume to cover fixed costs. Prime cost being healthy on low revenue just means you are efficiently doing too little trade.
See it run your restaurant.
Twenty minutes on your menu and your numbers. We'll show you what actually changes in the first month and exactly what it costs. If it's not right for your restaurant, we'll tell you that instead.
- Live in days, not months
- We build your menu and train your staff
- No contract, and thirty days to change your mind
Rather just ring us? +353 87 438 8032
Tell us about your restaurant
We reply the same day, usually inside a couple of hours.