04/28/2026
Prime Cost is Total COGS + Total Labor. It accounts for almost all of a business’s controllable costs and approximately ⅔ of total expenses. Here are some tips and tricks for getting your arms around Prime Cost:
View it holistically: The cost of creating your product comes from the cost of buying it and the cost of making it. Restaurants heavy in scratch cooking may have higher labor, while restaurants purchasing more meat and prepared foods may have higher in COGS.
65% is the magic number: Setting target percentages between COGS and labor depends on the concept, but generally, food falls between 24-30% and labor between 35-40%.
Tackle food first: at EHS, we’re sensitive to attacking the labor model because we know your people matter, so the best way to improve profitability over the long term is to develop solid food cost management principles.
Of course, every restaurant’s path is unique. If you’re considering where to focus next, EHS welcomes the chance to review your priorities and explore the opportunities together.
Visit ehsaccounting.com and let's connect about your prime costs.
