Restaurant labor cost: how to bring it under control
The real formula (with burden), a target, and scheduling that keeps it in line.
The formula — and the part people miss
Labor cost percentage = total labor cost ÷ sales. The part people miss: “total labor” isn’t just wages. It’s wages + salaries + the payroll burden (employer taxes and fees). Measured without burden, your labor % looks better than the books actually are.
What’s a healthy target?
Full-service restaurants often land around 25–35% of sales for total labor, but it depends on service model, tipping and your market. As with food cost, a number you can explain and hold beats a benchmark you can’t.
Schedule against sales, not habit
The lever is building the schedule against a sales forecast: right people, right shifts, right cost — and seeing projected labor as a % of projected sales before you publish, not after payroll. Weather, reservations and day-of-week all move the forecast.
Then protect the hours
A schedule only holds if the clocked hours match it. Guard against phantom hours (a punch with no real time), forgotten clock-outs, and unapproved overtime — and reconcile worked vs scheduled every week.
PULSE shows live labor cost vs sales as you build the weekly schedule (including the payroll burden, so the % matches your books), then a kiosk time clock with anti-phantom-hour guards and one-tap approvals keeps the worked hours honest — with sales-per-labor-hour tracked across every shift.