Labor Cost Benchmarks
Full-service casual: 30–35%. Fine dining: 35–40%. Fast casual: 25–30%. If you are above benchmark, start with your hourly scheduling — compare hours scheduled vs. actual covers per daypart. Most operators find 1–2 shifts per week that are overstaffed relative to actual volume.
How to Use This Calculator
Enter your total labor cost (hourly wages, salaries, payroll taxes, benefits, and workers' comp) and your total revenue for the same period. The calculator returns your labor cost percentage — the share of every revenue dollar that goes to staffing your operation.
Labor cost percentage is the second largest controllable expense in a restaurant after food cost. Together they form your prime cost (food + labor), which most operators target at 55-65% of revenue. If prime cost exceeds 65%, the restaurant is structurally unprofitable regardless of volume.
Labor Cost Benchmarks
Full-service restaurants typically run 28-35% labor cost. Fast casual runs 25-30%. Quick service runs 20-28%. Fine dining can run 35-40% because of higher skill requirements and service ratios. These numbers include all labor costs — not just wages, but payroll taxes, benefits, and insurance. If your labor percentage is above benchmark, the most common causes are overstaffing during slow periods, overtime that could be eliminated with better scheduling, and a revenue shortfall that makes the existing labor structure too heavy.
Lower Prime Cost — Start with Food
If labor is at benchmark but prime cost is still high, the food side needs attention. FrillPick compares your distributor prices item by item.
Compare Supplier Prices Free21-day free trial · Cancel anytime
Frequently Asked Questions
What is a good labor cost percentage for a restaurant?
A healthy labor cost percentage for full-service restaurants is 30–35% of revenue. Fast casual typically targets 25–30%. Fine dining can run 35–40% because higher check averages absorb the cost. If your labor cost exceeds 35% in a casual setting, audit your scheduling by daypart against actual cover counts.
What should I include in restaurant labor cost?
Include all hourly wages (kitchen and front of house), management salaries allocated to the location, payroll taxes (FICA, FUTA, state unemployment), and any employee benefits or workers' comp insurance. Owner draws are typically excluded unless you pay yourself a formal salary.
How do I reduce my labor cost percentage?
The most effective lever is scheduling optimization — matching labor hours to actual cover counts by daypart. Build a coverage model that ties scheduled hours to projected sales. Secondary levers include cross-training staff to reduce shift minimums, and improving throughput so you do more covers with the same labor.
What is the difference between labor cost and prime cost?
Labor cost percentage measures labor alone as a fraction of revenue. Prime cost combines labor cost and food cost. A healthy prime cost is 55–65% of revenue for full-service restaurants. If your labor is at benchmark but prime cost is high, the food cost side needs attention.