Free Restaurant and Bar Tool

Prime Cost Calculator

Enter your beverage cost, food cost, labor and sales for the period. You get prime cost %, the split behind it, and where it sits against target.

Prime cost —
Prime cost dollars —
Cost of goods —
Labor —

This is only as honest as the numbers you feed it. Real cost of goods is what you used, not what you bought, and that comes from counting. That is where prime cost gets real.

What Good Looks Like

Healthy prime cost by operation.

Prime cost is cost of goods plus labor, and it is the number that leaves room for everything else, rent, utilities, and what you take home. These are the lines operators watch. They are targets, not laws, and every operation runs a little different.

OperationHealthy prime costLeft for rent and profit
Bar, beverage-led55% to 60%40% to 45%
Bar with a full kitchen58% to 63%37% to 42%
Full-service restaurant60% to 65%35% to 40%
The line most operators watchUnder 65%Over 35%

Prime cost only moves two ways: your cost of goods or your labor. That is the whole reason it is the number to watch, everything you can actually control lives inside it. Bar Cop tracks both halves week to week and prices the gap in dollars, so you know which half moved and by how much.

The Math

How prime cost is calculated.

Step One

Cost of goods, counted

Add your beverage and food cost, and use what you actually used, not what you bought. Cost of goods is beginning inventory plus purchases minus ending inventory. Use invoices instead and prime cost is off by whatever your inventory swung. This step needs a count.

Step Two

Add all your labor

Add every dollar of labor for the same period. Hourly wages, salaried managers, payroll taxes, and benefits. The salaried people count. Leaving them out is how an operator swears labor is at 18 percent when it is really at 26.

Step Three

Divide by sales

Prime cost is cost of goods plus labor. Divide that by total sales and multiply by 100. Under 60 percent is healthy for most bars, 60 to 65 is a watch, and past 65 there is not much left for the rent. It is one number, and it is the one to run your week against.

Straight Answers

The prime cost questions.

What operators ask about the two biggest costs they can actually control.

What is prime cost?
Prime cost is your cost of goods sold plus your total labor. It is the two biggest controllable costs in a bar or restaurant added together, and it is the single number that tells you the most about whether the operation makes money. You measure it against sales as a percentage.
What is a good prime cost percentage?
Under 60 percent is healthy for most bars, and a beverage-led bar can run tighter because liquor carries a low cost of goods. 60 to 65 percent is a watch. Past 65 percent there is very little left for rent, utilities, and profit. A full-service restaurant with a big kitchen sits at the higher end of that.
Is prime cost off purchases or usage?
On what you used. Cost of goods sold is beginning inventory plus purchases minus ending inventory, not the total of your invoices. Using purchases is the most common mistake, and it throws prime cost off by whatever your inventory swung that period. The only way to get the used number is to count.
Do salaried managers count in labor?
Yes. Prime cost uses total labor, and that includes salaried managers, payroll taxes, and benefits, not just hourly wages. Dropping the salaried people out is how operators tell themselves labor is at 18 percent when it is really at 26.
Why watch prime cost, not just food cost?
Because the two halves trade against each other. Cut labor and prep suffers, so waste goes up. Buy cheaper product and you spend more hours making it work. Prime cost is the number that cannot be gamed by moving a cost from one column to the other.
How often should I check prime cost?
Weekly. Monthly is how you find out in the second week of the next month that you lost money in this one. A weekly reading against weekly sales tells you in time to change a schedule or a price while the month is still live.
What sales number goes in the bottom?
All of it: bar, food, catering and any other revenue the period earned. Prime cost is the universal restaurant number precisely because everybody measures it the same way, so leaving catering out of the sales figure while its cost sits in the top makes your prime read worse than it is.
Does overtime belong in prime cost?
Yes, and it is the piece most people leave out. Time over forty hours in a week carries a premium of half the hourly rate on top of the straight time you already counted, worked out per person per week rather than per shift. For a tipped employee it is half the state minimum, not half their cash wage. Leave it out and your labor number reads low on exactly the weeks it should not.
Does prime cost include rent or utilities?
No. Prime cost is your cost of goods plus your labor and stops there. Rent, insurance, utilities and the rest sit below it, which is the whole reason prime is useful: it is the part you can actually move week to week.
What if my prime cost is over 70 percent?
Split it before you panic. Work out cost of goods as a percentage and labor as a percentage separately, because what you do about it is completely different depending on which one is carrying the weight, and a single blended number will not tell you which.
Run Your Real Numbers

Run your real prime cost.

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