Glossary
Prime Cost
Food cost + labour cost combined as a percentage of revenue.
Definition
Prime cost is the sum of your food cost and labour cost as a percentage of revenue. It's the single most important number on a restaurant P&L because the two largest variable costs sit inside it. The industry rule of thumb in India: keep prime cost under 65–68% of revenue; 70%+ is a structural problem.
Example
Worked example
Food cost 33% + labour 28% = prime cost 61%. Healthy.
Tags
financep&l
Related terms