Prime cost: the one number to manage daily
Prime cost combines food, beverage and labour cost as a percentage of revenue. It's the most controllable cost block in a restaurant and the metric experienced operators check weekly. Target: 55–60% in well-run table-service restaurants; 50–55% in QSR/fast-casual; below 55% in upper mid-tier and fine dining.
Each component should be tracked separately too. Food cost above 32% means either menu pricing is low, portion control is loose, waste is too high, or supplier costs need renegotiation. Labour above 35% means scheduling is over-staffed for the demand pattern — or the menu requires too many hours of prep relative to revenue.
The revenue side: covers, turn time, ticket
Revenue per available seat hour (RevPASH) is the hospitality equivalent of RevPAR in hotels — the cleanest measure of operational efficiency. RevPASH = total revenue ÷ (seats × open hours). Casual European table service typically targets €15–25 RevPASH; upper-mid €25–40; fine dining €35–60.
Two levers: average ticket (driven by menu pricing, upselling, beverage attachment) and table turn time (driven by menu engineering, service training, payment flow). Reducing turn time from 105 to 90 minutes during peak periods can add 15–20% to lunch/dinner revenue with zero extra cost — frequently the single highest-impact operational change available.
Concept matters: matching cost structure to format
QSR / fast-casual: low ticket (€8–18), high volume (200–500 covers/day per location), labour-light kitchen, target prime cost 50–55%, net margin 8–14%. Sensitive to location footfall and delivery economics.
Casual table service: ticket €25–45, 80–150 covers/day, labour-heavy, target prime cost 58–62%, net margin 5–9%. Sensitive to lunch/dinner balance and beverage attachment. Fine dining: ticket €80–250, low volume (40–80 covers/day), highest labour, target prime cost 60–65%, net margin 5–8% with major sensitivity to consistency of bookings.
Model your restaurant economics
Enter covers, ticket size, food cost and labour cost — the EuroCalc restaurant profit calculator returns prime cost, contribution and projected monthly profit.
Open the calculator →Frequently asked questions
Why do new restaurants typically lose money in year one?+
Below break-even covers (typically 60–70% of capacity), ramp-up of operational efficiency, marketing spend to build reputation, and inventory wastage during menu development. Year-1 net margins of −5% to −15% are normal; if year 2 isn't positive, the concept is broken.
Is delivery profitable?+
Marginally. Platform fees (Uber Eats, Deliveroo, Just Eat) take 25–30%, packaging adds 2–4%, and food prep takes the same kitchen time as dine-in. Delivery should at least cover variable costs and contribute to fixed costs; treating it as primary revenue rarely works unless concept is built for it.
How do I know if my menu pricing is right?+
Calculate food cost % per dish (should average 28–32% across menu). Top-sellers below 25% are underpriced; below 22% are gifts. Use menu engineering matrix (popularity × profitability) quarterly to reprice or replace dishes.
What's the most underappreciated profit driver?+
Beverage attachment — getting average beverage sales per cover from €4 to €7 typically adds 3–5 percentage points to net margin, more than almost any food-side change. Train service staff on wine pairing and house-cocktail suggestion.
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