Labor cost percentage
Also called: labour cost percentage · labor cost %
Labor cost percentage is total labour cost divided by total sales. Total means fully loaded: wages, salaries, payroll taxes, workers' compensation and benefits — typically 15–25% on top of gross wages, and leaving it out understates the number badly.
Formula
Labor cost % = Total loaded labor cost ÷ Total sales × 100
Worked example · Loaded vs. unloaded on one month
- Gross wages and salaries
- $52,800
- Employer payroll taxes
- $4,490
- Workers' compensation
- $2,110
- Benefits
- $3,200
- Total loaded labour
- $62,600
- Sales
- $192,000
- Labor cost
- 32.6% (vs 27.5% unloaded)
Five points of difference. An operator tracking gross wages only believes they're running a comfortable labour line while prime cost says otherwise.
| Format | Typical labour % | Why |
|---|---|---|
| Quick service | 25–30% | Simplified production, less service labour |
| Fast casual | 27–32% | More assembly, still limited service |
| Casual full service | 30–35% | Full service plus a full kitchen |
| Fine dining | 35–42% | High skill, high service ratio, long prep |
| Coffee shop / bakery | 30–38% | Labour-intensive product, low ticket |
Read it alongside food cost, never alone. The two trade constantly — see prime cost for the worked example of why.
Run the numbers
Labor cost percentage calculator
The guide that works it through
Prime Cost Explained
What prime cost includes, how to calculate it correctly, the 65% benchmark, and why food cost and labour percentages are both misleading on their own.
Related terms
Prime cost
Total cost of goods sold plus total labor cost — the two numbers that decide whether a restaurant survives.
Fixed vs. variable cost
Fixed costs don't move with sales; variable costs do. Most restaurant labour is neither, and that's where planning goes wrong.
Covers
The number of guests served in a period — the denominator behind average check, labour per cover and cost per cover.