Labor Cost Percentage Calculator
Determine what percentage of your revenue is consumed by labor costs. Industry benchmarks vary by segment: quick service (25–35%), casual dining (30–35%), fine dining (30–40%).
Include wages, salaries, payroll taxes, and benefits.
Gross sales for the same period as labor cost.
Formula
Labor Cost Percentage = (Total Labor Cost ÷ Total Revenue) × 100
- Total Labor Cost — All employee-related expenses: gross wages, salaries, overtime, payroll taxes (FICA, FUTA, SUTA), health insurance, and other benefits.
- Total Revenue — Gross sales generated during the same period as the labor cost measurement.
- Result — The share of every dollar of revenue consumed by labor. A result of 30% means $0.30 of every $1.00 earned goes to labor.
Assumptions & References
- Both labor cost and revenue must cover the same time period for an accurate ratio.
- Labor cost should include all-in labor: wages, overtime, payroll taxes (~7.65% employer FICA), and benefits — not just base wages.
- Industry benchmarks used: 25–35% quick service, 30–35% casual dining, 30–40% fine dining (National Restaurant Association, 2023).
- This calculator uses a general hospitality benchmark of 30–35% for the status indicator.
- Labor cost percentage is a lagging indicator — review weekly or bi-weekly to catch trends early.
- Revenue used is gross sales, not net profit or gross profit.
- Reference: National Restaurant Association Restaurant Industry 2023 Fact Sheet; Cornell School of Hotel Administration labor cost guidelines.