Prime cost & labour cost % calculator (UK)

Prime cost % is cost of sales plus total labour, divided by sales with VAT taken off, times 100. Take a week's takings of £12,000 including 20% VAT: ex-VAT sales are £10,000. With £3,300 cost of sales and £3,100 total labour, prime cost is £6,400, which is 64%. Labour on its own is 31% and cost of sales 33%. Worked out on the £12,000 till figure, the same week would wrongly read 53.3%.

The hourly card uses 2026–27 rules: employer National Insurance at 15% above £96 a week, the 3% employer pension minimum on earnings between £6,240 and £50,270 a year, and 5.6 weeks' paid holiday. It does not deduct the Employment Allowance, and it leaves out sick pay, training and recruitment. Treat it as a floor, not the full cost.

How prime cost is worked out

prime cost % = (cost of sales + total labour) ÷ ex-VAT sales × 100

Food and labour are the two lines that move every week and the two you can still change before the month closes. Rent does not change because service was quiet.

Take the VAT off first. Food and drink eaten on the premises is standard-rated at 20%, so one sixth of every pound in the till was never yours. UK benchmarks are quoted against net turnover; a prime cost worked out on gross takings is measuring something else.

Cost of sales comes from the count, not the invoices. Opening stock + purchases − closing stock is what you used; purchases alone are what you bought. The free stock take template does the count.

What goes in the labour line

• Gross wages and salaries for front and back of house, including the manager.
• Employer's National Insurance and employer pension contributions.
• Holiday pay, overtime, bonuses, agency and temp staff.
• Your own hours at a real rate. If you work sixty hours on the line and take a small draw, your prime cost is flattered until the day you hire a replacement.

That is why a £12.71 National Living Wage hour costs about £16.28 for every hour actually worked (38 hours a week, all year, with pension). Put the right-hand card's figure into your rota maths, not the contracted rate.

What prime cost should a UK restaurant run at?

Food cost of 30–35% of ex-VAT sales (food GP of 65–70%) comes from the UKHospitality and Christie & Co survey; the segment table is on the UK GP benchmarks page. The same survey's last full edition (year to September 2017) put payroll at 29.4% of turnover, and the wage floor has gone up every year since, so treat that as a figure to reason up from. Together, a typical UK operator's prime cost lands somewhere in the sixties as a percentage of net turnover.

The American "keep prime cost under 60%" rule does not transfer: it is quoted on sales with no 20% VAT inside them, against different employer on-costs. Compare your own weeks with each other first.

Run it weekly

Use the same period for both halves. If payroll runs weekly and the stock take monthly, you are comparing four weeks of labour with a calendar month of food, and the number will jump around for no operational reason. Full method and sources: how to calculate prime cost for a UK restaurant and how to work out labour cost percentage. For the food side dish by dish, use the GP calculator or the food cost calculator. To plan a whole rota against sales, the Labour Cost & Wage Percentage spreadsheet does every shift at once.

Rates checked on GOV.UK on 15 October 2026: minimum wage rates, employer rates and thresholds 2026 to 2027, workplace pension contributions, holiday entitlement.