How do I calculate labor cost percentage?
Labor cost percentage = (total labor cost / total sales) x 100 for the same period. Total labor should be fully loaded: wages plus payroll taxes, benefits, and paid time off — not just hourly wages.
What is a good labor cost percentage for a restaurant?
Roughly 25-35% of sales for most full-service restaurants; quick-service is often lower, fine dining higher. Combined with food cost, aim to keep prime cost (food + labor) near or below ~60%.
Should labor cost include payroll taxes and benefits?
Yes for a true number. 'Fully loaded' labor adds employer payroll taxes, workers' comp, benefits, and PTO on top of gross wages — commonly 10-20%+ above base wages. This tool lets you add that as a burden percentage.
How can I lower labor cost percentage?
Schedule to forecasted sales, cross-train staff, tighten prep and shift changeovers, reduce overtime, and grow sales per labor hour. Cutting people below what service needs usually backfires on revenue and quality.