Food Cost vs. Prime Cost: The Number Your Accountant Watches

Food cost tells you how a dish is doing. Prime cost tells you whether the restaurant lives or dies. You need both, and they answer different questions.

The definitions

Food cost % = cost of goods sold ÷ food sales. What you learned in the food cost guide, rolled up across the whole menu for a period.

Prime cost = cost of goods sold + total labor (wages, taxes, benefits) ÷ total sales. It bundles the two costs you actually control week to week.

The 60% rule

Healthy full-service restaurants run prime cost at 55–60% of sales. Above 65%, there is usually no rent, insurance, or profit left in the remaining 35 points. Quick service can run slightly lower thanks to cheaper labor.

Why the split matters

Prime cost is a see-saw: a scratch kitchen might run 28% food / 32% labor (all that fabrication is labor), while a concept buying pre-portioned proteins runs 34% food / 24% labor. Both sit at 58–60% prime and both are fine. Judging either kitchen on food cost alone would tell the wrong story — which is exactly the trap of comparing your food cost to another restaurant's.

Working the two numbers

• Watch prime cost weekly at the whole-restaurant level.
• When it drifts, use food cost (per dish, per category) to find where — that's the diagnostic layer.
• Fix at the dish: re-spec, re-portion, re-price, or re-schedule.

Freecost owns the food half: live plate costs, category rollups, and price alerts when an ingredient moves. Pair it with your scheduling numbers and prime cost stops being a quarterly surprise.