What is the restaurant and foodservice industry standard for prime cost?

What is the restaurant and foodservice industry standard for prime cost?

• A. 50%
• B. 65%
• C. 75%
• D. 85%

Answer: (B)

Prime cost is the sum of direct labor and the cost of goods sold (food) expressed as a percentage of sales, and it’s used as a quick measure of how efficiently a restaurant is controlling its two largest controllable expenses. The industry standard target for prime cost is about 65% of sales. This level reflects a balance: enough labor and food cost to deliver your menu and service, while still leaving room in the remaining 35% of sales for all other operating costs and profit. If prime cost runs higher, profitability is squeezed; if it runs significantly lower, the operation may be under-resourced or compromising on quality or service. For example, with $10,000 in sales, aiming for prime costs around $6,500 keeps you near that 65% benchmark.

Prime cost is the sum of direct labor and the cost of goods sold (food) expressed as a percentage of sales, and it’s used as a quick measure of how efficiently a restaurant is controlling its two largest controllable expenses. The industry standard target for prime cost is about 65% of sales. This level reflects a balance: enough labor and food cost to deliver your menu and service, while still leaving room in the remaining 35% of sales for all other operating costs and profit. If prime cost runs higher, profitability is squeezed; if it runs significantly lower, the operation may be under-resourced or compromising on quality or service. For example, with $10,000 in sales, aiming for prime costs around $6,500 keeps you near that 65% benchmark.