How do you calculate restaurant labor cost percentage?

Restaurant labor cost percentage is total labor cost divided by total sales, multiplied by 100. Include wages, payroll taxes, benefits, overtime, and other payroll burden for a more accurate number.

What is a good labor cost percentage for a restaurant?

Many full-service restaurants target roughly 25% to 35% labor cost, while quick-service concepts may run lower. The right target depends on service model, sales volume, wage market, and operating hours.

What is prime cost in a restaurant?

Prime cost is the combined cost of goods sold and labor cost. Restaurant operators watch prime cost closely because it usually represents the largest controllable expense category.

👥 Restaurant Labor Cost

Stop scheduling by vibes. Calculate your labor cost.

Model staff count, hours, wage, payroll burden, food cost, revenue, prime cost, and how many labor hours you need to cut or add to hit target.

Use calculator All hospitality tools

Weekly labor model

Use blended staff numbers for a quick pass, or model a single department/shift block.

Staff count

Average hours per staff / week

Average hourly wage ($)

Payroll tax / benefits burden (%)

Taxes, benefits, workers comp, paid time, etc.

Overtime hours / week

Overtime multiplier

Weekly gross revenue ($)

Target labor cost (%)

Food cost (%)

Used to calculate prime cost.

Target prime cost (%)

Schedule optimization note

Average check ($)

Target covers per labor hour

This turns revenue into an operational staffing sanity check instead of spreadsheet cosplay.

Labor benchmarks

Under 20%: lean, but watch service quality and burnout.
25–35%: common full-service operating range.
Over 38%: schedule, overtime, and sales volume need review.

Prime cost matters

Food plus labor is the expense block operators can usually affect fastest. If prime cost is over target, fix the biggest offender first instead of nibbling everywhere.

Schedule move

Compare labor cost by daypart. The expensive problem usually hides in one dead lunch, one bloated close, or one manager who schedules like payroll is Monopoly money.

Want to find the fastest profit fix?

Ohio Hospitality AI can review your labor ratio, food cost, and missed-call revenue leak, then show what to fix first.

Request a free profit audit