RestoBird Restaurant Glossary • Financial Analytics
Restaurant Prime Cost
DefinitionPrime Cost is the combined total of a restaurant's Cost of Goods Sold (COGS) and total labor expenses (hourly wages, salaries, payroll taxes, and benefits).
Detailed Explanation
Prime cost represents the largest controllable expenses in restaurant operations. Because managers can influence ingredient usage and labor shift scheduling daily, prime cost is the single most important metric for operational health.
Key Calculation FormulaPrime Cost = Cost of Goods Sold (COGS) + Total Labor Costs
Why It Matters for Restaurant Profitability
Successful restaurant operators aim to keep Prime Cost under 55% to 60% of total revenue. Exceeding 65% leaves insufficient margin to cover rent, utilities, and debt service.
How RestoBird Solves This
RestoBird tracks both COGS (via recipe depletion) and labor expenses (via kiosk clock-ins and payroll export) in a single real-time dashboard.