Prime Cost Calculator
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What this tool does
COGS plus labour as a share of revenue — the master health metric for a food or retail unit, rated.
Other tools for this stage
- Ops CopilotDescribe what's going wrong in the unit; get causes, this week's actions, and metrics.
- Multi-Unit BenchmarkPut your units side by side — find the drag, and what closing the gap is worth.
- FDD Builder AIFor franchisors: your disclosure outline, the data to gather, and the earnings-claim call.
- Break-Even CalculatorThe revenue — and customer count — a unit needs each month before it makes a cent.
- Working Capital & RunwayModel the ramp-up: the working capital a unit burns before break-even, and whether your reserve survives it.
- Occupancy Cost RatioCheck rent + occupancy as a share of revenue against healthy benchmarks, and your max sustainable rent.
What this calculates
Prime cost is cost of goods plus total labour, expressed as a share of revenue. It is the single most useful health metric for a food or retail unit because the two lines it combines are the two an operator can actually move week to week, and because they trade against each other — cutting one often raises the other.
What you will need
Cost of goods sold. Actual usage over the period, derived from opening stock plus purchases minus closing stock. Purchases alone are not usage, and in a month with a big delivery the difference is large.
Total labour. All of it — wages, employment taxes, benefits and any agency cover. Wages alone can understate real labour cost by a substantial margin.
Revenue for the same period. Matched exactly to the cost period, and net of sales tax. A mismatched period produces a ratio that means nothing.
How to read the result
Track the trend before the level, because the level is sector-specific and the trend is yours. A prime cost drifting upward two points over a quarter is telling you something concrete: check whether goods or labour moved, then look for the cause — portioning and waste on the goods side, scheduling against demand on the labour side. Watch the trade-off too: cutting prep labour often raises waste, so a labour saving that shows up as a goods increase has not saved anything.
Questions about this tool
Why use prime cost instead of watching food cost alone?
Because the two move against each other. Less prep labour tends to mean more waste and worse yields, so food cost can look better while total cost is worse. Prime cost catches the trade you actually made.
What target should I set?
Set it from your own history and your format rather than from a general figure. Your best trading months are a more credible target than a benchmark drawn from units unlike yours.
Should the owner's wage be in labour?
If you work shifts, yes — cost your time at what you would pay someone else to do it. Otherwise the ratio flatters the unit by hiding labour you are supplying free.
For reference only; not legal, tax, or investment advice. Results depend entirely on the figures you enter — check them against your own quotes and your franchise agreement before acting on them.