A well organized and understandable restaurant profit and loss statement can provide infinite value to a restaurant owner. The best format to use allows the owner to understand his prime costs, total variable costs and the required contribution number necessary to cover fixed costs and desired profit.
Prime costs refer to direct variable costs in the production of a product. The two most common prime costs are materials and labor. However, there are more including packaging, process expenditures, warehousing and distribution.
Prime costs is a term most often used in the food service industry.