Labor Cost
What is labor cost percentage in a restaurant?
Direct answer
Labor cost percentage is total labor expense divided by restaurant sales, multiplied by 100. It shows how much of each sales dollar is used for wages, payroll taxes, benefits, and other included labor costs.
Key points
- Define labor consistently before comparing periods or locations.
- A percentage can rise because labor increased, sales fell, or both happened together.
- Labor percentage should be reviewed alongside service quality, sales per labor hour, and prime cost.
What to do next
- 1Choose which fully loaded labor expenses your weekly report will include.
- 2Match those costs to sales from the exact same operating period.
- 3Investigate changes by daypart, role, overtime, and sales volume before cutting hours.