Prime cost: add food and labour before you celebrate sales

Sales can rise and the owner can still go home with less. The usual reason is that food and people moved together, and nobody added them up.

That sum is prime cost. It is the one number that tells you whether the operating engine is healthy before rent, marketing and the electricity bill get a vote.

The definition

prime cost % = (food cost + labour cost) ÷ net sales × 100

Use consumed food cost (opening + purchases − closing), not purchase invoices. Use total people cost, not the wage line alone.

A monthly example:

At 60% prime, the rest of the P&L still has air. At 70%, a normal rent starts to erase the month.

Why this number beats watching food or labour alone

Managers trade the two without noticing.

• Cut two cooks → tickets slow → more comps and waste → food cost rises.
• Over-portion to “make service easier” → food cost rises → you hire another prep cook to keep up.

Each meeting looks like progress. Prime cost stays put, or climbs.

A steakhouse at 66% can be fine. A coffee counter at 66% is in trouble. The target moves with the concept; the discipline does not.

The three leaks that show up here first

1. Variance you never investigate. Theoretical food cost from recipes versus actual from the stocktake. A 3-point gap is already a prime-cost problem.
2. Hours that do not match the curve. Labour sitting through a dead afternoon is prime cost you can see on a sales-by-hour chart.
3. Menu items that cannot carry their labour. A dish at 22% food cost that takes twelve minutes of a senior cook is not cheap. Plate cost without time is incomplete.

A four-week way to get it on one page

• Week 1: Produce both inputs properly — a stocktake for food, a full people-cost total for labour.
• Week 2: Split prime cost by weekday. Friday at 58% and Tuesday at 72% is a scheduling problem, not a “food” problem.
• Week 3: Pick the worse half. If food variance is over 2%, start there. If labour hours in the dead zone are the spike, start there. Do not do both at once.
• Week 4: Re-price or drop two dishes whose food-plus-prep time cannot clear a 60% prime contribution.

When recipes, stocktakes, clock-in and payroll sit in one system — as they do in GoSufra — prime cost is a weekly figure, not a reconstruction at month end. You see the sum while you can still change the roster or the portion, not after the rent has already left.

Watch prime cost the way you watch the door on a Saturday. If this number is wrong, every number after it is decoration.