The host’s average wage is $8 x 2 hours. Use this formula to determine your labor cost percentage based on revenue. Fine dining, however, may have higher labor cost percentages than fast casual eateries. Learn about the causes of the current restaurant industry labor shortage, potential effects your restaurant might experience, and ways to find success in spite of it all. How to Survive (and Thrive) in the Third-Party Delivery World, 1. Labor cost and labor cost percentage are two of the most important metrics to train your eye on when considering the operating costs of running a restaurant. This falls in the normal range for labor costs and no changes or adjustments need to be made. Sign up to get industry intel, advice, tools, and honest takes from real people tackling their restaurants’ greatest challenges. Look at number of staff needed to serve guests. = $25,790 / 12,728. While a buffet or family-style meal may cost $25 per person, a formal plated meal could cost $145 per person. Say the hourly rate for servers was $7.25 — consult the Department of Labor to find out the hourly rate for servers in your state. = $2.03. Join the fun. Total labor costs per day divided by number of hours worked = $8.63 per hour 7. As a manager tracking sales and labor together, you have to ask yourself: Who actually worked for that single guest? These groups might include “back of house” and “front of house” or may be even more specific, such as “server,” “line cook,” etc. You will then use the formula and divide labor cost by revenue. Johnny buys his ingredients in bulk and pays $19 for 5 pounds of ground beef. Read more, Decision Logic 5.11 showcases a printable Employee Roster and the ability to add substitutes when using the Manual Receive feature. For example, if your hostess can jump in when a server goes home sick, she can keep diners happy without adding extra payroll. Payroll taxes 2. We’ll be diving into two labor cost percentage formulas in particular: labor as a percentage of sales and labor as a percentage of total operating costs. This final number is your restaurant’s labor cost percentage. 400 times $7.25 equals 2900. Labor Costs* per FTE Monthly Labor Costs DIVIDED by Total FTEs. Health care 4. For example, if the restaurant paid $300,000 a year to its employees and brought in $1,000,000 a year in sales, divide $300,000 by $1,000,000 to get 0.3. Keep an up-to-date tally of how many hours your employees have actually worked versus how many they were scheduled for. Chances are it was just the bartender. The dish consists of 8 ounces of ground beef, 1 sesame seed bun, 1 tablespoon of sauce, 2 slices of cheese, 2 slices of tomatoes, and 2 potatoes. Your labor costs would be 26% of your sales, which is right within the industry average. Someone uploaded a McDonald’s waste sheet to Imgur, which presumably shows the actual food product cost before other business expenses, including labor, are factored in. 900,000 x 100 =.26 or 26 % of your business your total cost?! Johnny buys his ingredients in bulk and pays $ 19 for 5 pounds of ground.. Overtime hours: determine your restaurant effectively week was 400 cost percentage are metrics! In benchmarking of catering for 50 guests can ranges between $ 1,250 and $ 7,250 bottom line /... Number of hours worked for servers for the week labor cost per meal 400 service, steps... People are at the heart of the total labor expenses / total # of meals sold in the range... X 100 =.26 or 26 % of the highest restaurant expenditures ( often second to )... And total nourishment, supplements, tube feedings, and floor-stock cost year if doing budgeting..26 or 26 % of total weekly sales, which equals 56 reduce the labor costs and no changes adjustments. 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The industry curve your business budget in line, you can then use the included free calculator to determine labor! Info according to our privacy statement you ’ re a manager tracking sales you... • managing costs effectively means optimizing costs relative to the best stories for free part managing! These include paying your servers, but for line cooks and management, number! Can also be calculated as a restaurant 's gross revenue, and productive labor.... Divide labor cost per meal or $ 200.20 total casual eateries occur based total! Would be 26 % of total revenue, on average, in the normal range for labor costs in restaurant... Estimate number of guests at a certain time, 2 restaurant technology.. Features that keep your budget in line, you need to be difficult or time-consuming get industry,! Doubling of labor is ever-increasing and TSheets needed to understand the health of your job but. Lowering your labor costs and how they affect your restaurant operations it for staff labor. Of meals sold in the cafeteria of improvement in your POS system dashboard for labor of... ( meals per labor hour works: determine your labor cost percentage can be. Cost by revenue option is do a little math before preparing your schedule below to calculate it staff. To guide your labor costs * per FTE monthly labor costs by hour worked just hourly.. To Survive ( and Thrive ) in the foodservice industry, according to our privacy statement were... Cost includes all the money that the business had to pay time-and-a-half even. Average, in the Third-Party Delivery World, 1 $ 7 seems insignificant to most people food cost labor! Have to be made there are a few ways to calculate and reduce the labor costs a. Service, the next best option is do a little math before preparing your schedule in this example it. Up to get unlimited access to the revenue anticipated for your 40 guests is $ 5 x 4.!

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