Free tool
Labor cost percentage calculator for restaurants
Labor cost percentage tells you what share of revenue goes to wages. Enter labor cost, revenue, and a target percentage below to see where you stand and how much budget that target leaves you for the period.
Labor cost calculator
| Labor cost % | 30.0% |
|---|---|
| Labor budget at target % | 2,800.00 |
| Variance from budget | 200.00 |
Labor is running 200.00 over the target budget for this revenue.
What labor cost percentage means
Labor cost percentage is total wages for a period divided by revenue for the same period, shown as a percentage: 3,000 in labor against 10,000 in revenue is a 30% labor cost. It's usually tracked weekly against a rolling revenue forecast, not just at month end, because by then it's too late to adjust the schedule that caused it.
"Labor cost" here means the wages paid for hours worked. Some restaurants also load in payroll tax and benefits to get a fully-loaded number — decide which one you're using and stay consistent, since the two can differ by several points.
A worked example
A week runs 3,000 in labor against 10,000 in revenue — a 30% labor cost. Here's what a 28% target would have allowed, and what a slower week does to the same schedule:
| Revenue | Labor cost | Labor cost % | Budget at 28% |
|---|---|---|---|
| 10,000 | 3,000.00 | 30.0% | 2,800.00 |
| 8,000 | 3,000.00 | 37.5% | 2,240.00 |
| 12,000 | 3,000.00 | 25.0% | 3,360.00 |
The schedule didn't change across these three rows — only revenue did. That's the trap with a fixed schedule: labor cost percentage swings with sales even when staffing decisions were sound, which is why a single week's number means less than a trend.
Target ranges by service type
Targets vary by how labor-intensive the service model is. These are common starting ranges, not rules:
| Service type | Typical range |
|---|---|
| Quick service | 22% – 28% |
| Fast casual | 25% – 30% |
| Casual dining | 28% – 33% |
| Fine dining | 30% – 38% |
| Bar / nightlife | 18% – 26% |
Combined with food cost, most full-service restaurants aim to keep prime cost — food cost plus labor cost — under 60% to 65% of revenue. Running low on one often means running high on the other, since a scratch-cooked menu that keeps food cost down usually needs more labor to execute.
Keeping labor cost on target
The lever that actually moves this number is the schedule, built before the week starts, not adjusted after it's over:
- Schedule against a sales forecast, not last week's headcount out of habit. A slow Tuesday and a busy Tuesday don't need the same staffing.
- Watch overtime as it happens, not on the next payroll report — a shift that runs long is cheaper to fix that day than to explain after the fact.
- Cross-train so a quiet shift can run with fewer people covering more stations, instead of a fixed headcount regardless of volume.
- Track actual hours against scheduled hours. A schedule that looks right on paper doesn't help if clock-ins consistently run early or late.
Tracking labor cost every week
A calculator gives you one week after the fact. Staying on target means building the schedule against a forecast in the first place, and catching overtime while a shift is still running instead of on the next payroll report. Barley's scheduling and time clock keep scheduled and actual hours in the same place, so labor cost is something you manage during the week, not a number you find out about after it.