Which figure is commonly cited as the prime cost standard in restaurant operation?

Which figure is commonly cited as the prime cost standard in restaurant operation?

• A. 55%
• B. 60%
• C. 65%
• D. 70%

Answer: (C)

Prime cost combines the two most controllable costs in a restaurant: direct labor and the cost of goods sold, expressed as a percentage of sales. This benchmark is used because it reflects how efficiently a operation converts sales into the core expenses that directly drive profit. A widely cited target for prime cost is 65% of sales. That means for every dollar of revenue, about 65 cents cover labor and food costs, leaving roughly 35 cents for all other expenses and profit. Some concepts may aim a bit higher or lower depending on format and market, but 65% is the standard reference you’ll see used in restaurant cost control practices.

Prime cost combines the two most controllable costs in a restaurant: direct labor and the cost of goods sold, expressed as a percentage of sales. This benchmark is used because it reflects how efficiently a operation converts sales into the core expenses that directly drive profit. A widely cited target for prime cost is 65% of sales. That means for every dollar of revenue, about 65 cents cover labor and food costs, leaving roughly 35 cents for all other expenses and profit. Some concepts may aim a bit higher or lower depending on format and market, but 65% is the standard reference you’ll see used in restaurant cost control practices.