Canada Restaurant Prime Cost Calculator (2026): Food + Labour + CPP/EI

In Canada, prime cost mistakes usually come from one of two things: using tax-inclusive sales or ignoring payroll loading. Both errors make margins look stronger than they are, especially in labour-heavy shifts.

This guide gives one operating standard you can apply every month: pre-tax denominator, loaded labour, and location-aware execution.

Quick Summary

• primeCost = foodCost + labourCost
• Use pre-tax sales (before GST/HST) in the denominator.
• Load labour with employer CPP and EI before analysis.
• Run a short weekly check and one full monthly reset.

Why This Matters in 2026

Statistics Canada reported on 2026-01-20 (December 2025 CPI release):

• All-items CPI: +1.8% year over year
• Food purchased from restaurants: +3.6% year over year

Restaurant inflation running above headline CPI means menu economics can drift faster than annual budgeting cycles.

Core Formula (Canada)

netSales = grossSales / (1 + indirectTaxRate)
primeCost = foodCost + labourCost
primeCostRate = (primeCost / netSales) x 100

For tax setups, use your actual province combination (GST, HST, or GST + PST/QST).

What to Include in Food Cost

foodCost = openingInventory + purchases - closingInventory + waste + staffMeals

Include packaging in delivery-heavy channels so item economics match your real checkout cost.

What to Include in Labour Cost (Canada)

Load labour before prime cost:

loadedLabour = baseWages x (1 + employerCPP + employerEI + benefits + otherOnCosts)

For 2026, CRA payroll guidance sets:

• Employer CPP: 5.95%
• Employer EI: 2.24% outside Quebec (1.76% employee EI x 1.4 multiplier)

Worked Example: Toronto Fast-Casual Store

Assume this month:

• Gross sales (HST-inclusive): C$158,200
• HST rate (Ontario): 13%
• Net sales: C$140,000
• Food cost: C$46,200
• Base wages: C$34,000
• Employer CPP: 5.95%
• Employer EI: 2.24%
• Other on-costs (benefits etc., example): 3.00%

Step 1) Load labour:

loadedLabour = 34,000 x (1 + 0.0595 + 0.0224 + 0.03)
loadedLabour = C$37,807

Step 2) Prime cost:

primeCost = 46,200 + 37,807 = C$84,007
primeCostRate = 84,007 / 140,000 x 100 = 60.0%

Local Execution: Downtown Toronto vs Suburban Calgary

20-Minute Monthly Prime Cost Loop

1. Export pre-tax sales and top item volume by channel.
2. Refresh key ingredient costs from current invoices.
3. Load payroll with current CPP/EI assumptions.
4. Recalculate prime cost and compare against previous month.
5. Reprice or re-portion the largest gap items first.

Related Guides

• Prime Cost Guide
• Canada Restaurant Labour Cost Calculator
• Canada Menu Pricing Guide
• Canada Menu Pricing Calculator
• Canada Food Cost Calculator
• Canada GST/HST Restaurant Pricing Guide
• Menu Price Review Checklist

KitchenCost helps you keep recipe cost, payroll loading, and menu targets in one operational routine.

Sources (checked on 2026-02-13)

• Statistics Canada - Consumer Price Index, December 2025
• Canada Revenue Agency - GST/HST rates
• Canada Revenue Agency - CPP contribution rates, maximums and exemptions
• Canada Revenue Agency - EI premium rates and maximums