Restaurant prime cost calculator India — formula + free worksheet

About this piece. Prime cost is the single number that tells you whether the outlet is going to survive the year. Yet most independent restaurants in India review it monthly at best, and many never separate it out from "kitchen expenses" in their accountant's P&L. This piece gives you a restaurant prime cost calculator — the formula, the input lines, target bands by format, and a worked example you can plug your own numbers into this evening.

What prime cost actually is

Prime cost is the sum of the two operating costs that move with the menu:

Prime cost = Cost of Goods Sold (COGS) + Total labour cost
Prime cost % = Prime cost / Net sales

Everything else on the P&L — rent, electricity, gas, marketing, depreciation — is either fixed or semi-fixed in the short term. Prime cost is the lever you can pull this week. Operators we've spoken to in NCR and Pune commonly say: "if I get prime cost right, the rest is just discipline."

The full inputs list (don't skip any)

The calculator works only if the inputs are complete. The most common operator error is undercounting labour by leaving out PF, ESI, and the manager salary.

The formula in five lines

1.  Net sales              = Dine-in + Takeaway + Aggregator (after commission, pre-GST)
2.  COGS                   = Opening stock + Purchases – Closing stock
3.  Total labour cost      = Wages + PF/ESI + Bonus accrual + Manager + Staff meals
4.  Prime cost             = COGS + Total labour cost
5.  Prime cost %           = Prime cost / Net sales

Five lines. If your P&L can't produce all five, your P&L has a gap somewhere.

Target bands by format

These are the bands operators we've spoken to settle into after the first 6–12 months of disciplined tracking. Anything above the upper bound means you are running on a margin trap and a single bad month will drain reserves.

Aggregator-heavy outlets feel the labour band move down (fewer service staff) and the food band move up (packaging + aggregator commissions hitting effective COGS) — net effect is similar prime cost, just composed differently.

Worked example — a 60-cover NCR casual-dine restaurant

A composite operator running a 60-cover casual dine in NCR sees this monthly:

At 56.8% prime cost, this composite outlet is sitting at the upper edge of the casual-dine target band (52–60%). The remaining 43.2% of net sales must cover rent, CAM, electricity, gas, gas refills, software, marketing, repairs, depreciation, owner draw, and a buffer for the slow month. Most of those bills don't shrink in a slow month. That's why operators living at 58–60% prime cost feel constantly cash-stressed even when the outlet looks busy.

Where the leakage hides

When prime cost drifts above the target band, it is almost never one big leak — it is three small ones compounding.

1. Closing stock under-count. Half-used spice packets, oil cans, and bar bottles get rounded down or skipped. This inflates COGS this month and deflates it the next, so the trend looks noisy and no one trusts it.
2. Wastage not separated. Spoilage, staff over-eating, sample serves to regulars — all of it is in COGS but not visible. Without a wastage line, you can't manage it.
3. Aggregator commissions in the wrong place. Treating gross aggregator sales as revenue and the commission as an expense makes COGS % look better than reality. Always book net of commission.
4. PF/ESI booked annually. Quarterly or annual booking makes the prime cost % look 2–3 points better in the months without the booking and worse in the month with it. Accrue monthly.
5. Manager salary treated as owner draw. The manager is operational labour. Excluding it understates labour cost by 4–6 points.

The improvement loop — 4 weeks to a tighter prime cost

Once you have a measured prime cost, the improvement loop is the same regardless of format.

1. Week 1: Tighten the count. Standardise closing-stock day-and-time. Use the same scale, same containers, same order. Whoever counts on Sunday, also counts the following Sunday.
2. Week 2: Split wastage out. Add a wastage line to the daily kitchen sheet. End-of-week roll-up gives you a visible number to manage.
3. Week 3: Renegotiate the top three SKUs. The 3 SKUs with the highest monthly spend are usually 50–60% of food cost. Re-bid them with two alternate vendors.
4. Week 4: Labour map. Plot peak/off-peak cover counts against shift schedules. Off-peak overstaffing is the cheapest labour leak to fix — it doesn't require a wage cut, just smarter rostering.

The free worksheet — what to copy into your own sheet

If you want to build the calculator yourself in Google Sheets, set up these columns and rows. The point is not the tooling — the point is consistent monthly inputs.

Row labels (column A)               Column B (numbers)
1.  Net sales (pre-GST, post-AC)    ___
2.  Opening stock                   ___
3.  Purchases                       ___
4.  Closing stock                   ___
5.  COGS = B2 + B3 – B4             =B2+B3-B4
6.  Wages                           ___
7.  PF + ESI + bonus                ___
8.  Manager                         ___
9.  Staff meals                     ___
10. Labour total = B6:B9            =SUM(B6:B9)
11. Prime cost = B5 + B10           =B5+B10
12. Prime cost %                    =B11/B1

Lock the formula cells. Update only the inputs. Review the prime cost % cell on the first of every month and write the number in a single running log. The trend is the value — one month is noise, six months is signal.

When to act on a high prime cost number

A single bad month with prime cost 3 points above the target band is not a crisis — supplier prices vary, festival staffing inflates labour, closing-stock timing slips. Two consecutive months above the band is a signal. Three consecutive months is a structural problem and needs the 4-week loop above.

The discipline is dull and the upside is large. A 3-point reduction in prime cost on a ₹2 crore annual revenue outlet is ₹6 lakhs back to the operator each year — usually the difference between a stressed outlet and a self-funding one.

Related on Restaurant Daily

• Food cost percentage in Indian restaurants — benchmarks by format
• Restaurant labour cost percentage — Indian benchmarks
• Restaurant unit economics in India — full guide