Food Profit Margin Calculator
Calculate restaurant gross profit, prime cost percentage (COGS + labor), and net operating profit margin across occupancy, utilities, and marketing.
Restaurant Prime Cost & Net Profit Margin Formula
Prime Cost % = [(COGS + Labor) / Revenue] × 100; Net Profit Margin % = [(Revenue − All Costs) / Revenue] × 100- Prime Cost: Food/beverage inventory (COGS) plus total kitchen and front-of-house payroll. Must remain under 60% for healthy operations.
- Occupancy: Rent, property taxes, CAM fees, and building insurance (target 6%–10% of sales).
- Net Profit Margin: Final cash remaining after paying all operating expenses (industry benchmark: 5%–10%).
Step-by-Step Worked Example
Calculation Steps:
How to Use This Calculator
Assumptions & Limitations
- All inputs are entered as monthly values.
- Income taxes and corporate entity taxes are excluded from net operating profit.
Frequently Asked Questions
What is Prime Cost and why is it critical in food service?
Prime Cost is the sum of Cost of Goods Sold (COGS) and total Labor expenses. It represents the only two major costs a restaurant manager can control daily. Keeping Prime Cost between 55% and 60% of sales is the #1 predictor of restaurant profitability.
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