How to Calculate and Control Prime Cost in Your Canadian Restaurant
Prime cost — total COGS plus labour — is the single most important number for an independent restaurant. Here's how to calculate it, set targets, and keep it under 60% of sales.
What Is Prime Cost?
Prime cost is the sum of your total Cost of Goods Sold (COGS) and your total labour cost. For most independent Canadian restaurants, a healthy prime cost sits between 55% and 60% of total sales. Anything above 65% means you're likely operating at a loss once rent, utilities, and other fixed costs are paid.
How to Calculate It
Prime Cost = Beginning Inventory + Purchases − Ending Inventory + Total Labour Cost
Total labour includes wages, employer CPP/EI contributions, WSIB/WCB premiums, and benefits. Don't forget to include salaried managers and owner-operator pay if you draw a wage.
Set a Target and Track Daily
The biggest mistake independent operators make is reviewing prime cost only at month-end. By then, the damage is done. Track your food cost percentage and labour percentage daily against a target, so you can course-correct mid-week.
Foodie Run calculates your prime cost automatically from your daily sales and expense entries — no spreadsheets required.
Quick Wins
- Recipe costing: Cost every menu item to a penny and flag items above your target food cost %.
- Schedule to sales: Build your labour schedule against projected sales, not last week's habit.
- Track wastage: Log every wasted item — it's hidden COGS that erodes margin.
Start by tracking prime cost daily for two weeks. You'll spot the leaks fast.
Take control of your restaurant's numbers
Foodie Run brings prime cost, labour, forecasting, and reporting into one Canadian-built platform.
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