How to Calculate Your Restaurant's Prime Cost in the UK

Restaurant owners and general managers across the UK are tightening margins while trying to deliver memorable guest experiences. In this guide, we’ll explain what prime cost is, how to calculate it, and why it matters — especially when food and labour account for the lion’s share of your operational expenses.

What Is Restaurant Prime Cost?

Prime cost is the combined total of two major expenses:

• Cost of Goods Sold (COGS): including ingredients, packaging, alcohol, and other menu item prep costs.

• Labour costs: including wages, payroll tax, health benefits, holiday pay, and other employee-related expenses.

These are direct costs — meaning you have control over them. But as UK operators know, that doesn’t always make them easy to manage. Wages, benefits, and rising ingredient prices often fluctuate due to market or regulatory changes.

Why Does Prime Cost Matter In The UK?

Labour and food prices have both surged in the UK. According to the Toast Consumer Preferences Survey 2025, in which 200 UK diners were surveyed about restaurant pricing and value, 44.5% consider rent and utilities the biggest cost challenge for restaurants, but food and staffing follow closely behind.

Optimising your prime cost gives you a clear path to profitability without necessarily raising prices. And in a market where 78% of UK consumers say dining out is becoming too expensive, keeping costs lean while delivering quality is more important than ever.

How Do You Calculate Prime Cost?

Here’s the formula:

Prime Cost = COGS + Total Labour Cost

Then, calculate your Prime Cost Percentage:

Prime Cost % = (COGS + Labour) / Total Sales x 100

Example:

• COGS: £28,000

• Labour: £17,000

• Sales: £75,000

Prime Cost = £45,000 Prime Cost % = (£45,000 / £75,000) x 100 = 60%

For many UK operations, aiming for 55% or lower is ideal.

How to Reduce Prime Cost Without Compromising Quality

1. Set a Realistic Target

Benchmark your current costs and set an achievable reduction goal — e.g. bring prime cost from 62% to 57% over 3 months.

2. Use cost Tracking Tools

Start with Toast’s Restaurant Labour Cost Calculator for real-time staff cost visibility. 

3. Engineer Your Menu

Promote high-margin dishes, and consider portion and packaging costs. 63.5% of UK diners say they "sometimes" notice price changes on menus — and transparency helps. According to the Toast Consumer Preferences Survey 2025, 87.5% of UK consumers say price influences their dining choice — and 42.5% would avoid a venue they believe is overpriced.

4. Automate Invoice Tracking

Use invoice automation to spot supplier price spikes. You'll save hours of admin time and catch cost increases early.

5. Improve Your Rota

Use a digital scheduling tool to match staffing with actual demand. Overstaffing during quiet hours is one of the biggest labour cost drains.

6. Cross-Train You Team

Boost productivity by training staff to cover multiple roles, reducing the number of employees needed per shift.

Final Thoughts

Prime cost isn’t just a line on your balance sheet. It tells the story of how your restaurant runs day to day. From staffing to ingredients, it shows where your money’s going and where there’s room to improve. And with UK diners paying more attention to prices than ever, getting a handle on your prime cost can help you earn their trust, protect your margins, and run a smarter, more sustainable business.