The labor cost percentage formula
labor cost % = (wages + taxes + benefits) ÷ total sales × 100
Use the same period for both sides — this week’s full payroll cost against this week’s sales. Include every dollar you spend on people: hourly wages, salaries, overtime premiums, employer payroll taxes, workers’ comp, and any benefits.
Benchmarks by concept
| Concept | Typical labor cost % |
|---|---|
| Quick service / fast casual | 25–30% |
| Casual full service | 30–35% |
| Fine dining | 35–40% |
Sales per labor hour: the scheduling metric
Percentage tells you where you ended up; sales per labor hour (SPLH) tells you how to schedule. If your team produces $55 of sales per scheduled hour on a good week, you can build next week’s schedule by dividing forecasted sales by that number. Enter your total labor hours above to see it. Pair this with the prime cost calculator — labor and food cost trade off against each other (scratch kitchens spend more on labor and less on goods; heavy prep convenience products flip it), and prime cost is where they meet.
Frequently asked questions
What is a good labor cost percentage for a restaurant?
Typical targets: 25–30% of sales for quick service, 30–35% for casual full service, and up to 35–40% for fine dining, where service headcount is part of the product. Include payroll taxes and benefits — leaving them out understates true labor cost by 10–15%.
How do I calculate labor cost percentage?
Divide total labor cost for a period — wages, salaries, overtime, payroll taxes, and benefits — by total sales for the same period, then multiply by 100. $9,600 of labor against $32,000 of weekly sales is a 30% labor cost.
Should salaried managers be included in labor cost?
Yes. A common trap is tracking only hourly labor — a $70,000 GM salary is about $1,350 a week that has to come out of the same sales. Most operators include all management payroll; just be consistent so week-to-week comparisons hold.
How can I lower labor cost without cutting service?
Schedule to forecasted sales by daypart rather than by habit, contain overtime (one 50-hour cook at time-and-a-half costs more than a 25-hour part-timer), cross-train staff so slow shifts run leaner, and watch early clock-ins — 15 minutes a day across a 12-person staff is roughly 15 paid hours a week.