Labor cost calculator
Your labor cost %, the hours next week's sales can pay for, and the sales per labor hour to cut staff at.
You'll need: Net sales, payroll and time clock hours, all for the same week or month.
Free calculator
Work out your labor cost
Works in any currency. Nothing you type leaves this page.
Example numbers. Replace them with yours.
Your POS sales summary: net sales, after discounts and comps, before tax and tips. Add back any service charge you pay out to staff; some POS reports leave it out.
Your payroll report: gross pay for everyone paid by the hour, hourly managers too, for the days worked, overtime included. Leave out tips, but keep a service charge paid to staff.
Your time clock: regular and overtime hours actually worked, not scheduled. Leave out salaried managers' hours; their pay goes under salaries.
Managers', chefs' and other salaried pay for the week: a yearly salary ÷ 52. Leave blank if everyone is paid by the hour.
What you pay on top of pay as the employer, such as payroll taxes, health insurance or a pension, with a week's share of any monthly or yearly bill. Leave blank if the pay above already includes them. Use a typical recent week: early in the year, unemployment taxes run higher. Or take a quarter's taxes ÷ that quarter's pay, times the week's pay.
Add more detail: overtime and your own pay
Your payroll report's overtime hours. Shows your overtime share against the 8% line RestaurantDoctorAI uses.
What you'd pay someone to do your hours, plus the payroll taxes on it. Leave blank if you're on payroll. It shows as a second figure; the main one stays as your books have it.
With the example numbers
Labor cost is 35% of net sales.
Pay, taxes and benefits: 7,875 of 22,500 in net sales.
That's inside the 30–35% range for full service, right at the top. A slow week or a pay rise would push it over.
Each point of labor cost (1% of your sales) is worth about 225 a week, or 11,700 a year, at these sales: about 13 hours of hourly staff.
Wages alone are 31% of sales; payroll taxes and benefits add 4 points.
With taxes and benefits at 12.9% of pay, an hour of hourly staff costs you 16.94, not the 15.00 of pay alone.
Count pay by the days worked, not the day it was paid: a payroll run this week can pay for last week's shifts.
How we worked it out
- Labor
- 5,175 + 1,800 + 900 = 7,875
- Share of sales
- 7,875 ÷ 22,500 × 100 = 35%
- Range
- 30–35% for full service
- One point
- 1% of 22,500 = 225
- A year
- 225 × 52 = 11,700
- Wages alone
- 6,975 ÷ 22,500 × 100 = 31%
- Taxes and benefits on pay
- 900 ÷ 6,975 × 100 = 12.9%
- An hour of hourly staff
- 5,175 × 7,875 ÷ 6,975 ÷ 345, rounded up = 16.94
- One point in hours
- 225 ÷ 16.94 = 13.28, about 13
What's a good labor cost percentage?
Anything inside the range for your type of restaurant. These are the targets the calculator checks yours against, the same ones the free profit check uses.
| Restaurant type | Labor cost target |
|---|---|
| Quick service | 26–31% |
| Fast casual | 27–32% |
| Full service | 30–35% |
| Fine dining | 34–38% |
| Bar | 25–32% |
For comparison, the National Restaurant Association's figures for 2024 put the median labor cost of all full-service restaurants at 36.5% of sales, and 34.2% for those that made a profit. At limited-service restaurants, meaning counter service, the medians were 31.7% and 30.0%.
There's no single good labor cost percentage, because three things move it. The first is how you serve. A counter needs fewer paid hours for each dollar of sales than a dining room with servers, bussers and a full kitchen, so quick service runs lower than full service. The second is your sales. The same crew costs a bigger share of a slow week than a busy one, so the percentage can rise even when the schedule didn't change. The third is what gets counted. Some figures you'll see leave out payroll taxes and benefits, managers' salaries, or an owner who works without pay. In our guide's example, wages alone come to 31% of sales, and with payroll taxes and benefits it's 35%. That's why we compare you with a range for your type of restaurant, counted the full way: everyone's pay, managers included, plus payroll taxes and benefits, with tips left out. Treat the top of the range as a ceiling to stay under, not a number to aim for.
Gross wages are hourly pay plus salaries, managers included and tips left out. Use the same dates for labor and sales.
For why labor runs high and the steps that bring it down, see our guide to restaurant labor cost percentage.
Common questions
Is payroll percentage the same as labor cost percentage?
Yes, it's the same number under another name. Some owners and payroll companies call it payroll percentage; in the UK it's labour cost, and in Australia wage percentage. Whatever it's called, count payroll taxes and benefits along with wages, or it looks lower than it is.
Do I count salaried managers and my own pay?
Count managers and other salaried staff: for a week, a 52nd of the year's salary; for a month, a 12th. If you're on payroll, your pay is already in. If you work in the restaurant without a salary, add what you'd pay someone to do your hours, plus the payroll taxes on it, under Add more detail. The calculator shows that as a second figure, so the headline stays the number your books give.
What about tips and service charges?
Leave tips out of both sales and payroll. If you add a service charge or an automatic gratuity and pay it to your staff through payroll, count it in net sales too. Otherwise leave it out of both.
Should I use scheduled hours or hours worked?
Hours worked, from the time clock, overtime included: they're the hours you paid for. Leave out salaried managers' hours, since their pay goes under salaries. Scheduled hours are the plan, so check them against next week's hours before you post the schedule.