In a low-margin business in which sales can fluctuate, operators of consistently profitable restaurants don't wait until the end of the month to learn how their restaurants performed. Though their monthly or four-week financial statements are important, they're used mainly to confirm what they already know. As one operator said, "If I waited until the end of the month to know how my restaurant was doing, it would be too late."

To get meaningful, timely information on how their restaurant is doing, many operators get a "Prime Cost Report" at the end of each week. A prime cost report includes cost of sales (food, beverage and paper goods in quickservice restaurants) and all payroll costs, including the gross wages of management and hourly staff, plus payroll taxes and employee benefits such as workers' compensation and employee insurance.

The goal in most fullservice restaurants is to keep prime cost, as a percentage of total sales, at 65 percent or less. Quickservice restaurants often shoot for a prime cost at or below 60 percent of sales. The reason prime cost is such an important number is that it provides feedback on how well a restaurant manages its largest and most volatile costs: food, beverage and hourly labor. These three costs often represent 90 percent of the costs in most restaurants that are controllable in the short term.