Start with consistent definitions
Prime cost is cost of goods sold plus labor cost. Divide that total by net sales for the same reporting period. Define what belongs in each category before comparing locations or weeks.
- Use net sales excluding sales tax; handle discounts and refunds consistently.
- Include wages, payroll taxes, and benefits if you want a fully loaded labor view.
- Estimate food cost with beginning inventory + purchases − ending inventory.
Calculate the number, then investigate
A percentage is a starting point. Changes in sales, menu mix, purchasing, counts, overtime, or training hours can all move the result. Compare dollars and percentages together.
- Compare the same weekdays and reporting duration.
- Verify unusually large inventory changes before acting.
- Separate controllable variance from planned costs such as training.
Make the weekly review useful
Choose one or two questions that your managers can answer with evidence. An action has a named owner, a deadline, and a measurable result. Use targets appropriate to your concept and service model.
- Review the largest cost movement first.
- Agree on a specific action rather than a general cost-cutting goal.
- Check progress and customer experience at the next review.
Give the next step an owner and a review date.
Use this guide to structure a team conversation. Document the assumptions, choose a focused action, and revisit the result.
Explore restaurant calculatorsEducational operating guidance. Adapt the process to your restaurant and review professional matters with the relevant qualified advisers.