Restaurant labor costs are frequently the highest prices of owning a restaurant. Restaurateurs generally aim to keep labor costs in between 20% and also 30% of gross revenue. However, a full-service, white-tablecloth restaurant will certainly likely have a higher labor price percentage than a casual dining restaurant, because they employ an ext staff to provide a greater level of service.

So just how do you manage restaurant labor costs? Well, yes no sure-fire, 100% correct method to go around managing labor prices in a restaurant since every bar, restaurant, and coffee shop is different, and also that way that each distinct place has actually a unique restaurant job cost situation that will need to be regulated differently. You can start with maintaining track the staffing via your restaurant POS system, yet after that suggest it’s every going to depend on the distinct needs of her restaurant. 

That said, right here are a couple of basic tips and tricks because that both calculating and also managing restaurant job costs.

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Group her Restaurant Labor prices for better Clarity

Dividing staff into teams shows friend which positions cost the most. Entrust front-of-house employee such as servers, hosts, and also bartenders come one group. Kitchen staff such together cooks and also dishwashers are an additional natural group, together are monitoring staff. You can additionally divide your staff by whether they’re paid by hourly fairy or salary.

Restaurants have to aim to keep labor costs between 20% and also 30% of gross revenue.

Once you have your staff all divvied up, you can compare what each team prices you and also see if you have the right to tinker through the combination of employee you schedule throughout each shift to lug your restaurant’s labor expenses down. If bartenders are significantly more expensive than servers, try replacing a bartender with two servers. If the task still gets done and also the night goes turn off without a hitch, you’ve uncovered a means to alleviate your labor expenses already.


Understand your Prime cost With a Restaurant Labor cost Formula

Warning: yes a small math comes up, however it’s certain nothing that you can not handle. While calculating something dubbed prime cost might sound scary and daunting, it’s much easier than you can think, and also it will certainly tell friend a ton around your restaurant’s job costs.

Your prime expense is the amount of her labor expenses plus your price of items sold, or COGS because that short. COGS = the price to develop each food and also beverage article on your menu. A restaurant’s prime price should ideally it is in 60% or less of complete sales and also represents the bulk of manageable expenses. To calculate your prime cost, list all hourly wages, salaried labor, payroll tax, and benefits, and add the amount of her labor costs.

Congrats! You’ve simply mastered the central way that many calculate restaurant job costs.

Download our Restaurant cost Tracker to aid keep monitor of your monthly and also weekly costs.

Move beyond Asking just “What portion of Sales should Labor it is in In a Restaurant?”

Calculating labor as a percent of sales can be useful. However determining staff productivity exclusively on the basis of labor together a portion of sales doesn’t give you the detail needed come identify locations for improvement. For example, let’s say agency policy is because that labor together a percentage of sales to it is in 20% or less. This week it’s running at 27%.

But the doesn’t failure different job categories, e.g., servers, cooks, bussers, etc., make it impossible to recognize which categories may be contributing come the issue. It additionally doesn’t tell you what time of the day, week, or meal period where the best variances may be occurring. In order to truly determine where labor costs are climb up, there’s no getting roughly the necessity of having actually a complete and also detailed picture.

Looking in ~ labor expenses this means also doesn’t account for holidays or other special events that can warrant more staff time. The biggest thing come remember around restaurant labor costs is the they’re just one part of a whole and also sometimes they’re simply a symptom of an additional issue. Quite than rushing to minimize labor costs, try to number out what’s really going on and also fix the problem itself quite than putting a lessened labor expenses bandaid on it.


Save on Restaurant Labor prices With Training and also Thoughtful Scheduling

Use labor scheduling and time and attendance solution to for sure you have top-level visibility and also can identify which employees might go right into overtime prior to it is as well late. These systems have the right to also suggest out if your employees tend to clock in at an early stage or dilly dally about before actually getting to work-related if friend pair the mechanism with a quick inspection of exactly how your staff start their shifts. Shot turning her data into offer intuitive reports such together graphs that are an effective method to conveniently evaluate multiple to adjust of data in ~ one time—and crucially, identify outliers.

Invest in training your staff and they’re much less likely to leave, and also be more productive while they work since valued employees the are put on a course to professional expansion aren’t going to ditch you for any type of other restaurant that doesn’t market those points and, sadly, too plenty of don’t.

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Use labor scheduling and also time and attendance systems to certain you have top-level visibility and can identify which employees can go right into overtime before it is too late.

Average Labor expenses By Restaurant Type

Ok, currently that did you do it covered all of the basics, the time to take a look at some restaurant labor expense averages based on the various restaurant types. Currently that friend know how individualized labor costs are at every individual restaurant, you can keep that assumed in mind together you peruse this averages to gain a feeling (just a sense) of whether or not you’re in the best ballpark:

Table company restaurants: 30%-40%.
Where certain restaurants autumn on this range depends on “the menu and also extensiveness the service,” Chron notes. “Food costs (including beverages) because that the restaurant market run commonly from the 28 percent to 35 percent range, relying on the style of restaurant and also the mix of sales.”

Looking for a brand-new budgeting guide? inspect out’s restaurant cost tracker!