Prime Cost
The sum of food costs and labor costs, representing the two largest controllable expenses in restaurant operations. Typically targeted at 55-65% of sales in QSR.
Related Terms
Food Cost Percentage
The ratio of food and beverage costs to total sales revenue, typically expressed as a percentage. QSR industry benchmarks range from 25-35% depending on concept.
Labor Cost Percentage
Total labor expenses (wages, benefits, payroll taxes) as a percentage of sales. QSR benchmarks typically range from 25-35%, varying by service model and automation level.
COGS
Cost of Goods Sold - the direct costs attributable to the production of food and beverages sold, including ingredients, packaging, and direct labor costs. Typically expressed as a percentage of sales.
Related Articles
How to Open a KFC Franchise in 2026: Costs, Fees, Revenue, and the Full FDD Breakdown
A KFC franchise costs $1.85M to $3.77M with average revenue of $1.35M. Full 2025 FDD analysis covering fees, unit economics, 314 US closures, and what buyers need to know.
Finance & EconomicsThe 2026 QSR Real Estate Bidding War: Too Many Chains Chasing Too Few A-Sites
Six major QSR brands are simultaneously executing aggressive expansion plans in 2026, colliding over the same premium drive-thru sites and driving acquisition costs to new highs. Here's what operators need to know.
Operations & ManagementStarbucks' Turnaround Paradox: Traffic Is Up, But 420 Basis Points of Margin Just Vanished
Brian Niccol's Back to Starbucks plan is driving traffic for the first time in two years. But North America operating margins contracted 420 basis points in Q1 FY2026, RBC Capital and Wolfe Research both downgraded the stock in one week, and the CFO admits two-thirds of the damage is labor spending with no clear end date. For restaurant operators everywhere, Starbucks is now the industry's most expensive case study in what turnarounds actually cost.
Finance & EconomicsRestaurants Are Losing $20 Billion a Year to Missed Phone Calls. AI Is Finally Fixing It.
Over 40% of restaurant phone calls go unanswered during peak hours, costing the industry an estimated $20 billion annually. A new wave of AI phone ordering platforms is turning that dead air into revenue, and the economics are hard to argue with.
Technology & InnovationOil Price Shock Hits Restaurant Supply Chains: $100 Crude Sends Food-Away-From-Home Costs Surging
Crude oil past $100/barrel is hammering restaurant supply chains through diesel surcharges, petroleum-based packaging costs, and rising energy bills. The Iran conflict oil disruption adds a new cost layer on top of existing tariff and beef price pressures.
Operations & Management