Labor Cost Calculator
Payroll is one of the largest controllable costs in a restaurant. This calculator shows your labor cost as a percentage of sales, includes payroll taxes and benefits, and helps you compare against your target.
Payroll & sales
Enter wages, payroll taxes/benefits, and sales for the same period. Include salaried manager wages in regular wages.
How to use this tool
- Enter regular wages and overtime for the period.
- Add payroll taxes and benefits (burden).
- Enter total sales and total labor hours for the same period.
- Optionally add employee count and target labor percentage.
- Review labor %, SPLH, and over/under target dollars.
Formula explanation
Total labor cost = regular wages + overtime. Labor including burden = total labor + payroll taxes/benefits. Labor cost % = labor including burden ÷ total sales × 100. Sales per labor hour = total sales ÷ total labor hours.
Example calculation
Regular wages $18,000 + overtime $1,200 + burden $3,500 = $22,700. Sales $85,000. Labor cost % = 26.7%. SPLH = $58.62/hour.
What this means for your restaurant
Labor percentage connects staffing decisions to sales performance. A high labor % might mean slow sales, overstaffing, overtime, or inefficient scheduling.
Common mistakes
- Excluding payroll taxes and benefits from labor cost.
- Comparing weekly labor to monthly sales.
- Ignoring salaried manager hours in total labor hours.
- Using labor % alone without sales per labor hour.
- Cutting labor so far that service speed and sales suffer.
Pro tips
- Track labor by daypart — lunch vs. dinner often need different staffing models.
- Use sales forecasts to build schedules 7–14 days out.
- Cross-train staff so you need fewer total bodies during slow shifts.
- Pair this with prep lists and cleaning checklists to reduce wasted labor time.
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