Pizzeria profitability ratios: food cost, labour, prime cost
Six ratios are enough to run a pizzeria: food cost (20–30% of net sales), labour (25–35%), prime cost (under 60%), rent (under 10%), energy (3–6%) and delivery platform commission. That last one is often as large as the profit itself.
The six ratios to track
| Ratio | Calculation | Target | Warning sign |
|---|---|---|---|
| Food cost | Cost of food used ÷ net sales | 20–30% | Above 32% |
| Labour | Wages, employer NI and pension ÷ net sales | 25–35% | Above 38% |
| Prime cost | Food + labour ÷ net sales | Under 60% | Above 65% |
| Rent | Rent, service charge and business rates ÷ net sales | Under 10% | Above 12% |
| Energy | Electricity + gas ÷ net sales | 3–6% | Above 8% |
| Platform commission | Commission ÷ total net sales | As low as possible | Higher than net profit |
Indicative ranges for a dine-in or takeaway pizzeria. Net sales means excluding VAT. Pizza runs a lower food cost than a full-menu restaurant (28–35%).
Prime cost is the most useful of the six. Food and labour often trade off against each other (dough made in-house costs less in flour and more in time), and it is their sum that decides whether everything else can be paid.
A worked example
A pizzeria turning over £260,000 a year excluding VAT, with 30% of sales through delivery platforms at 30% commission:
| Line | Amount | % of sales |
|---|---|---|
| Food cost | £67,600 | 26% |
| Labour | £83,200 | 32% |
| Rent, rates, service charge | £20,800 | 8% |
| Energy | £13,000 | 5% |
| Platform commission | £23,400 | 9% |
| Other costs (packaging, insurance, accountant…) | £26,000 | 10% |
| Profit before tax | £26,000 | 10% |
Operating numbers to check every night
- Average order value: sales ÷ orders. A drink or dessert offered every time raises it more reliably than a price rise.
- Peak throughput: pizzas out between 7 and 9pm. Your oven sets the ceiling, not demand, and knowing it stops you paying for marketing that brings orders you cannot bake.
- Share of direct orders: phone, counter and your own website against the platforms. It is the number that moves the commission line.
Working out your real food cost
Theoretical food cost comes from your costing sheets; actual food cost comes from stocktaking: (opening stock + purchases − closing stock) ÷ net sales. The gap between the two is waste, heavy portions and staff meals. More than two points of difference means it is time to find out where it is going.
To see how many pizzas a day you need to break even, use the break-even calculator and the food cost calculator.