Labor cost percentage measures total payroll against sales — the other half of restaurant cost control. Total labor cost divided by total sales, watched alongside food cost.
The example
$10,500 labor on $35,000 sales.
| A | B | |
|---|---|---|
| 1 | Item | Value |
| 2 | Labor cost | 10500 |
| 3 | Sales | 35000 → 30% |
The formula
The formula:
How it works
How it works:
- Total labor cost includes wages, payroll taxes, and benefits — not just hourly pay.
- Divide by total sales for the period and format as a percentage.
- Full-service often runs 25–35%; quick-service is lower.
- Combine with food cost for prime cost — the number that really drives profit.
Labor cost is controllable in real time. Unlike rent, you can flex staffing to forecasted covers. Many operators track labor as a percentage per shift or daypart, comparing scheduled hours against projected sales, so they can send someone home when it’s slow — before the daily number slips.
Try it: interactive demo
Total labor cost and sales.
Variations
Labor per cover
Cost per guest:
Sales per labor hour
Productivity:
Target labor budget
At a target %:
Pitfalls & errors
Fully loaded. Include taxes and benefits, not just wages, for a true labor cost.
Same period. Labor and sales must align in time.
Daypart it. A daily average can hide an over-staffed slow shift.
Practice workbook
Frequently asked questions
How do I calculate labor cost percentage in Excel?
What's included in labor cost?
How do I manage labor cost in real time?
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