Period
Cost of goods sold
Labor
True labor cost includes employer taxes (FICA, FUTA, SUTA), workers comp, and benefits. Most operators load 8-15% on top of wages to get the real number.
FAQ
Why prime cost matters more than food cost or labor cost alone
Food cost % and labor % are individual lines on the P&L. Prime cost combines them — and that combination is what actually determines whether the restaurant is making money. A 28% food cost with a 38% labor cost is the same prime cost as a 32% food cost with 34% labor — both at 66%. Watching one without the other lets you trade money you saved on food for money you bled on labor.
What's a healthy prime cost percentage?
Industry target: 55-65% for full-service, 60-65% for QSR / fast casual, lower (40-55%) is exceptional. Above 70% is usually unsustainable unless rent or other fixed costs are very low. The right target depends on your rent, utilities, and other below-the-line costs — prime cost has to leave room for those plus profit.
Should I include payroll taxes and benefits?
Yes. Wages on a check aren't your full labor cost. Employer-side payroll taxes (FICA 7.65%, FUTA, SUTA), workers comp, and benefits typically add 8-15% on top of wages. Most P&Ls separate them but prime cost should include both.