Calculate your true labor cost percentage, compare against industry benchmarks, and find where to optimize.
Enter your gross sales for the period
Add employees or role groups — hours are per week
| Role / Position | Category | Count | Hourly Wage | Hours | OT Hours | Cost | |
|---|---|---|---|---|---|---|---|
$ | $0 |
Include the full burden cost for a more accurate picture
Stop calculating labor cost in spreadsheets. See how Sideworks gives your managers a live labor cost dashboard with real-time scheduling insights.
Labor cost percentage is the ratio of your total labor expenses to gross revenue. It includes all wages, payroll taxes, benefits, and other compensation costs. This is the single most important metric for restaurant profitability — even small changes in labor cost percentage can mean thousands of dollars to your bottom line.
Formula: Total Labor Cost ÷ Gross Revenue × 100
The ideal labor cost percentage varies by restaurant type. Quick-service restaurants typically target 25–30%, while full-service casual dining runs 30–35%. Fine dining can reach 30–40% due to higher service ratios. Bar-forward concepts often achieve the lowest labor cost at 20–25% due to higher revenue-per-labor-hour.
Your target should account for your concept, market, and stage of business. A brand-new restaurant may run higher while building volume.
Payroll burden goes beyond base wages. It includes employer-side FICA taxes (7.65%), state unemployment taxes (SUTA), workers’ compensation insurance, health benefits, paid time off, and any employer-paid tips in tip credit states. These costs typically add 15–25% on top of gross wages.
Many managers only track gross wages — including the full burden gives you a more accurate picture of your true labor cost.
Overtime is calculated at 1.5× the regular hourly rate for hours exceeding the standard schedule (typically 40 hours/week in the US). For example, if a cook earns $18/hr and works 5 overtime hours, the overtime premium is 5 × ($18 × 1.5) = $135. This calculator automatically applies the 1.5× multiplier to any hours entered in the OT column.
Yes. Salaried managers are a labor cost. Convert their salary to an equivalent hourly rate for the period you’re measuring: divide annual salary by 52 for weekly, or by 12 for monthly. Include their hours as the full period (40 hrs/week or ~173 hrs/month).
Prime cost is the sum of your total labor cost and cost of goods sold (COGS / food + beverage cost). It’s the most comprehensive measure of your two biggest variable expenses. Most profitable restaurants keep prime cost between 55–65% of gross revenue. If your labor cost is 32% and COGS is 28%, your prime cost is 60%.
At minimum, calculate labor cost weekly. Daily tracking is ideal — it lets you catch scheduling issues before they compound. This is one of the biggest advantages of automated tools like Sideworks: you see labor cost in real time instead of waiting for payroll reports.
Labor cost is the total dollar amount you spend on labor (wages + taxes + benefits). Labor cost percentage expresses that dollar amount as a percentage of your gross revenue. Percentage is more useful for benchmarking because it normalizes for restaurant size — a $5M/year restaurant and a $1M/year restaurant can meaningfully compare percentages.