Managing food and labor costs is a crucial aspect of running a profitable restaurant or food service business. Combined, these controllable costs are known in the industry as your prime cost, which is reported as a percentage of your sales.
To remain profitable in the restaurant business, your maximum prime cost should generally be lower than 65%. As food and labor costs vary among different types of operations, prime cost ranges may dip as low as 55%. Finding your sweet spot within this range will help you achieve profitability without negatively affecting service and quality of your offerings.