The number that decides whether most operations make money is prime cost. Here is where it leaks, and a 15 minute Monday check that catches it.
What prime cost is
Prime cost is your cost of goods sold (food and beverage) plus your total labor (hourly, salaried, payroll taxes and benefits). For most full service operations it is the biggest controllable piece of the P&L. Many operators aim to keep it somewhere in the low 60s as a percentage of sales, but the right target depends on your concept, so set yours from your own history and budget.
Why it leaks
Prime cost rarely blows up in one bad week. It creeps. A point here from heavy pours, a point there from a schedule copied forward from last week, a delivery nobody checked against the invoice. None of it looks wrong on any single shift. That is the problem.
Five places to look first
Receiving. Count against the invoice, spot check weights, and get the credit memo before the driver leaves.
Pours. Jiggers on every drink, and a weekly count on a fixed shelf order.
Comps, voids and discounts. Read the report weekly and look for patterns by employee, terminal and shift.
Scheduling. Build each week from the forecast and the events on the books, not from last week's schedule.
Menu mix. Cost every plate from current invoices and check which items are carrying their weight.
The 15 minute weekly check
Monthly P&Ls arrive weeks too late to steer by. A weekly prime cost number, even a rough one, gives you time to correct. Every Monday:
Pull net sales for the week.
Add food and beverage purchases for the week (adjust for big inventory swings if you count weekly).
Add labor for the week from payroll or your scheduling system.
Divide food, beverage and labor cost by sales.
Compare it to your target and to last week. If it moved, find out which of the five areas above moved it.
Imperfect and early beats perfect and late. A rough weekly number is more useful than an exact number a month after the fact.
Free tool
If you want to run the math right now, use the free Prime Cost Calculator. Plug in your sales, cost of goods and labor, and see where you stand in about two minutes.
If you'd like a second set of eyes on your numbers, OpsEdge Hospitality offers fixed price Operations Audits, with the scope and price agreed in writing before any work starts: opsedgehospitality.com/services
What is the one number you wish you saw weekly instead of monthly? Hit reply and tell me. I read every one.
Rob Bruni
OpsEdge Hospitality