Labor Cost
- How do you calculate labor cost for a restaurant?
Labor cost is total labor expenses divided by total sales, expressed as a percentage. Add up wages, payroll taxes, benefits, and tips (if applicable), then divide by revenue for the period. - What is a good labor cost percentage?
For full-service restaurants, a good labor cost percentage is typically 30–35% of sales. Quick-service restaurants often aim for 20–25%. The right target depends on your concept, location, and service style. - How can I reduce labor costs without hurting service?
Focus on smarter scheduling, cross-training, and reducing turnover. Small changes in these areas often cut costs more than wage cuts, which can backfire on service. - Should I use a tip credit or pay full minimum wage?
It depends on your state and business model. Tip credit can lower payroll costs but adds compliance risk and may hurt recruiting; paying full minimum wage simplifies things and can improve retention. - How do you control overtime in a restaurant?
Control overtime by forecasting demand, scheduling within 40 hours, and monitoring hours daily. Cross-training and adjusting shifts can also help avoid last-minute overtime. - What is the difference between tipped and non-tipped wages?
Tipped wages are lower hourly rates for employees who regularly receive tips, with a tip credit to reach minimum wage. Non-tipped wages are standard hourly rates for employees who don't receive tips.