Glossary

What is Prime Cost?

Last updated: July 7, 2026

Prime cost is the sum of a restaurant's cost of goods sold (food and beverage) plus total labor costs, including payroll taxes and benefits. It is the single most important controllable number in restaurant operations, typically targeted at 55-60% of total sales.

Prime Cost example with real numbers

A location doing $120,000/month with $38,000 in COGS and $34,000 in fully loaded labor has a prime cost of $72,000, or 60% of sales. Cutting 2 points ($2,400/month) adds nearly $29,000/year in profit — per location.

How multi-unit restaurant groups manage prime cost

Vento tracks prime cost daily per location by combining POS sales with payroll and invoice data, and alerts managers when the ratio drifts from target instead of waiting for the month-end P&L.