Costs02/15/2026

Critical Metrics

4 numbers that determine survival

<35% Food Cost %<65% Prime Cost<20% Rent Ratio<6 months Break-even

25-35%

Food Cost %

= COGS / Revenue. Above 40% = danger zone.

<60-65%

Prime Cost

= (COGS + Labor) / Revenue. The single most important metric.

<15-20%

Rent-to-Revenue

= Rent / Revenue. Above 25% = extremely high risk.

4-8 months

Break-even Point

Time to recoup investment. Over 12 months = reassess.

Coffee ShopFood cost 20-30%Prime cost <55%. High margins but fierce competition.

EateryFood cost 30-40%Prime cost <65%. Needs high volume to offset thin margins.

Bubble TeaFood cost 15-25%Prime cost <50%. Very high margins; marketing costs are significant.

RestaurantFood cost 28-38%Prime cost <60%. Labor takes a large share.

Cloud KitchenFood cost 30-38%No rent, but delivery app fees of 20-30%.

Bar / PubFood cost 15-25%Prime cost <50%. Beverage margins are very high.

Food cost > 40%

Investigate now: ingredient waste, supplier price hikes, over-portioning, theft. Every 1% of food cost equals roughly 10% of net profit.

Prime cost > 70%

Virtually impossible to turn a profit. Must cut costs or raise prices immediately.

Rent ratio > 25%

Rent is consuming all your profit. Consider renegotiating or relocating.

Revenue declining 3 months in a row

Not a seasonal dip? Check for: new competitors, declining quality, negative Google reviews.

If you don't know these 4 numbers for your business model, start validating now — this tool will calculate them for you.

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