What is one point of prime cost worth to you?
Three numbers off your P&L. No email required to see the answer. The calculator shows what each point of prime cost is worth annually, what closing your gap to target would put back on the bottom line, and what that same improvement adds to the value of the business if you ever sell it.
Your numbers
Use trailing twelve months if you have it. Estimates are fine. Nothing is sent anywhere until you ask us to.
Sales net of tax, comps, and discounts.
Food plus beverage. Most full-service independents land between 28 and 34.
Wages, salaries, payroll taxes, and benefits. Include your own salary.
Used only for the enterprise value line. Small independents typically trade on a multiple of seller discretionary earnings in this range.
Above the 60 percent line most full-service independents should hold. Every point above it is money that never reaches the bottom line.
If you closed part of the gap
A two-point move is a normal first-year result when nobody has been watching. It usually comes from portioning, waste, and one over-staffed daypart, not from firing people or raising prices.
| Improvement | Annual profit | Over three years | Enterprise value |
|---|
Enterprise value shown is the improvement in annual earnings multiplied by your selected multiple. It is the change in value, not a valuation of your business.
Want this written up properly?
We will email this scenario back to you alongside the twelve numbers guide, and tell you which of the three levers we would pull first in a room like yours. No charge, no obligation.
What this calculator does and does not tell you.
Prime cost is cost of goods plus total labor as a percentage of net sales. It is the only number that captures both halves of what you actually control day to day, and it moves before anything else does. Rent does not change when service slips. Prime cost does, within a week.
It also compares cleanly across very different rooms. A bowling and entertainment venue, a fine dining restaurant, and a taproom have almost nothing in common operationally, but all three are in trouble above 70 percent and all three are healthy under 60.
It is the right target for most full-service independents. Quick service and counter-service concepts should run meaningfully below it. Entertainment venues with a large non-food revenue mix, bowling, simulators, event fees, often run lower because the attraction revenue carries almost no cost of goods.
If your mix is unusual, the number to beat is your own trailing twelve months, not an industry average. The calculator is a starting point for a conversation, not a verdict.
Close enough to be useful, and this is why the number is worth watching. If you hold sales flat and take a point out of prime cost, essentially all of it lands on the bottom line, because your rent, insurance, utilities, and debt service do not change. That is what makes cost work so much more reliable than chasing volume: a point of prime cost is worth roughly the same as a large increase in sales, and it does not require a single new guest.
The honest caveat is that cuts which damage the guest experience show up in covers two quarters later. Every improvement in this calculator assumes sales hold.
Small independent hospitality businesses generally transact on a multiple of seller discretionary earnings. Improve annual earnings by a dollar on a sustainable basis and you have generally added the multiple in enterprise value, which is why a two-point prime cost improvement is usually worth far more at exit than it is in any single year.
Multiples vary widely with lease terms, owner dependence, revenue concentration, equipment condition, and the quality of your books. Systematized operations with clean reporting trade meaningfully higher than owner-dependent ones with a shoebox of receipts, which is a large part of why we build the reporting before we do anything else.
This is an illustration, not an appraisal or an offer.
Nothing at all unless you submit the form. The calculation runs entirely in your browser and the inputs are never transmitted. If you do submit, your scenario comes to us with your contact details so we can write back with something specific rather than a form letter. See our privacy policy.
The twelve numbers, in one guide.
Prime cost is the first of twelve. The rest, with formulas, targets, and a printable weekly scorecard, are in the free operating guide.
Tell us what is not working. We will tell you exactly how we would fix it.
Every engagement starts the same way: a 45-minute working call, a walk of your P&L and your floor, and a written point of view you can act on whether or not you hire us. No deck, no discovery fee.