Profit in a restaurant lives in the margins — a few percentage points of food or labor cost is the difference between a great year and one where you're wondering why you're doing this. I've watched the numbers on both sides. Here are the ones every owner should know cold, and how to keep them healthy.
Food cost percentage
Food cost is the cost of ingredients divided by the menu price of the dish. Tracking it per item tells you which dishes are profitable and which are quietly losing money. Recipe costing — knowing exactly what goes into each plate — is the foundation.
Labor cost percentage
Labor cost is total labor (wages, taxes, benefits) divided by sales. The right number depends on your concept, but letting it drift up without noticing is one of the fastest ways to erode profit. Schedule against forecasted sales, not just last week's habit.
Prime cost
Prime cost — food cost plus labor cost — is the single most important number in a restaurant. Most healthy full-service restaurants run prime cost below 60% of sales. If yours is climbing, that's the first place to look.
Watch them weekly
Monthly numbers are too slow. By the time you see a problem in a monthly P&L, the damage is done. Track your key costs weekly so you can adjust scheduling and purchasing before small leaks become big ones.
Cost control is where restaurant experience pays off fastest — and I've got the receipts to prove it. I offer consulting from somebody who's actually run the numbers on a real restaurant, not a spreadsheet jockey. Explore our consulting services and let's get your margins where they belong.
Look, you've read this far — so let's skip the small talk.
If any of this hit a little too close to home, that's a sign it's time to do something about it. We're local, we've run restaurants, and I'd love to help you sort yours out — no jargon, no pressure, just an honest read from somebody who's been behind the line.
