Labor cost percentage is your total labor cost divided by your sales for the same period. Include wages, payroll taxes and benefits, and count salaried managers too. Compare it with your own past weeks and with the same day last month, not only with published ranges.
The formula
Labor cost percentage = total labor cost divided by sales, times one hundred. Use the same dates for both numbers. A week that runs Monday to Sunday works well, because it holds every weekday once.
What counts as labor
Count hourly wages, salaries for managers who work the floor, employer payroll taxes, workers compensation and benefits you pay. Leaving out any of these makes the number look better than it is. Owners who work the line without pay should add a fair wage for themselves, at least in a side calculation, so that you see what the restaurant costs to run.
What to compare it to
Published ranges exist, and many sources mention a labor share somewhere in the high twenties to mid thirties of sales for full service [VERIFY source]. Quick service and fine dining differ. Use any range as a reference only.
The best comparison is your own history by day part. Lunch on a Tuesday should look like the last four Tuesdays. If it does not, find out why.
Levers that move it
The first lever is the schedule. Match staffing to the sales pattern by hour, not by habit. If Thursday dinner has doubled and Monday lunch has halved, the schedule should show it.
The second lever is sales per labor hour. Raising sales with the same staff lowers the percentage without cutting anyone. A kiosk or QR ordering can let the same team serve more guests.
The third lever is overtime. Watch it weekly. A shift that creeps over forty hours for one person is often cheaper to give to someone else.
The fourth is training. A new hire who takes long to learn costs more than the wage suggests. A written checklist for each station shortens the ramp.
A simple test
Pick one shift to trim by a few hours for four weeks. Use the calculator below to see what the cut would change. Track sales and guest wait times on that shift. If sales hold, keep the change. If they drop, restore the hours.
See how scheduling and the time clock work in Zorveta One, and check the prime cost guide for the bigger picture.
Labor cost percentage calculator
Include payroll taxes and benefits for a fair view.
Optional. One shift is a good test.
Optional.
- Labor as a share of sales
- Enter sales
- Saving from the cut
- $0.00
- Labor share after the cut
- Enter sales
Nothing you enter is saved or sent. Example numbers are made up.