How to Calculate Your Restaurant’s Prime Costs

Prime costs are a key metric in the restaurant industry, as they represent a significant portion of overall expenses. They are the sum of a restaurant’s food and labor costs.

In order to calculate it, you will need to add up your COGS and labor costs. 

Calculate Your COGS and Labor Costs

To calculate your COGS, you will need to take into account the cost of all the ingredients and supplies used to make your menu items, as well as any waste or spoilage that may occur.

To determine your labor costs, you will need to consider the wages and benefits of all your employees, as well as any taxes or other employment-related expenses.

Once you have these figures, you can add them together to determine your prime costs. 

Keep Your Prime Costs Low to Increase Profit Margins

If your prime costs are too high, it can eat into your profit margins and make it difficult to stay competitive in the marketplace. 

There are several ways to lower your prime costs and increase your profit margins. One of the most effective ways is to focus on reducing your food costs. This can be achieved by carefully managing your inventory, reducing waste and spoilage, and negotiating better deals with suppliers. 

Another way to lower these is to focus on reducing your labor costs. This can be achieved by scheduling your staff more efficiently, implementing automation where possible, and offering incentives for employees to work more efficiently. 

You can also focus on increasing your sales, which will help to offset your prime costs. This can be achieved by implementing effective marketing and advertising strategies, as well as creating a strong online presence. 

In addition, you can also focus on creating a more efficient kitchen, which will help to reduce your labor costs. This can be achieved by investing in new equipment and technology, as well as implementing new processes and procedures to streamline kitchen operations. 

Finally, you can focus on building a strong relationship with customers, which helps increase sales and offset your prime costs. This can be achieved by providing excellent customer service, creating a welcoming and comfortable atmosphere, and offering promotions and discounts to customers. 

Utilize Back Office Technology to Keep Prime Costs Low

Overall, prime costs are a key metric in the restaurant industry. It’s important to keep an eye on them to ensure that they’re as low as possible.

There are several ways to lower them. This includes reducing your food costs, reducing your labor costs, increasing your sales, creating a more efficient kitchen, and building a strong relationship with your customers.

By implementing these strategies, you can help to increase your profit margins and stay competitive in the marketplace.