Free restaurant labour cost calculator (2026)

Short answer: your labour cost percentage is total labour divided by sales for the same period, times 100, and most restaurants aim to keep it in the 25 to 35 percent range. Total labour has to include the on-costs on top of wages, such as payroll taxes, leave and retirement contributions, which usually add 10 to 20 percent to the headline pay. Use the free calculator below to get your number and the band it falls in, then use the rest of this guide to bring a heavy week back into line without wrecking service.

The labour cost calculator

Enter your total labour cost for a week and your sales for that same week. Include every dollar you pay people to work, plus the on-costs, and use sales excluding tax so the percentage is comparable to published benchmarks.

The band matters as much as the number. Under 25 percent can be lean and healthy, or it can be a warning that you are understaffed and burning out your team and your service. Above 35 percent for more than a week or two is a signal to act, either by tightening the roster or by lifting sales per labour hour. Read the percentage next to your prime cost, because labour only tells half the story.

What counts as labour cost

The most common mistake is counting base wages only. Real labour cost includes the on-costs that ride on top of every hour worked, and those add up to a meaningful margin difference over a year. Include all of the following so the percentage is honest.

• Base wages and salaries for every person paid to work, including working owners and salaried managers.
• Payroll taxes and statutory on-costs your region charges the employer.
• Retirement contributions such as KiwiSaver or a pension match.
• Holiday pay, sick leave and other leave accrual.
• Overtime, penalty rates, bonuses and staff meals where you provide them.

On-costs commonly add 10 to 20 percent on top of headline pay, so a roster that looks like it costs a certain amount in wages actually costs more once everything is loaded in. Build the fully loaded figure into the number you track, or you will consistently under-read your true labour cost and over-schedule.

A worked example

Take a busy cafe doing $24,000 in weekly sales excluding tax. The roster runs $6,000 in base wages, and loaded on-costs of 20 percent add $1,200, for a total labour cost of $7,200. Divide $7,200 by $24,000 and you get a labour cost of 30.0 percent, right at the top of the healthy band.

Now watch the leverage. At $24,000 in sales, each single percentage point of labour is worth about $240 a week, or more than $12,000 a year. Shaving three points off a bloated 35 percent week without touching service quality is over $700 a week back in the business. That is why the weekly habit matters: small, steady corrections compound.

Labour cost by format

There is no single correct number, because service intensity varies by format. Use these as starting ranges, then set your own house target based on your model and your local wage rates.

How to bring a high labour percentage down

When the calculator shows red, resist the urge to simply cut hours from a busy shift. That trades a small wage saving for slow service and lost sales, which usually makes the percentage worse because the denominator falls too. Work through these levers in order.

1. Roster to demand. Build shifts from your hourly sales curve so you are staffed for the real rush, not a habit from a busier season. See staff scheduling for the method.
2. Tighten the edges. Trim the quiet first and last hour of a shift where one person can cover, rather than pulling someone from the peak.
3. Cross-train. When people can flex between stations, one absence does not force a defensive over-schedule.
4. Lift sales per labour hour. Upsells, faster table turns and a tighter menu raise the denominator, which pulls the percentage down without cutting anyone.
5. Fix the forecast. If you keep getting caught out, your demand forecast is wrong; track it against actuals until the roster matches reality.

Fold the weekly labour figure into your weekly KPI review alongside sales, food cost and prime cost, so it becomes a number the whole management team watches rather than a surprise at month end.

Mistakes that hide your real labour cost

• Counting base wages only and ignoring the 10 to 20 percent of on-costs.
• Using sales including tax as the denominator, which flatters the percentage.
• Only checking at month end, when the week is long over and unchangeable.
• Cutting a peak shift to save wages, then losing more in slow service and sales.
• Leaving working-owner pay out of the number so it looks artificially low.
• Judging labour in isolation instead of alongside food cost as prime cost.

Frequently asked questions

What is a good labour cost percentage for a restaurant?
Most table-service restaurants aim to keep total labour at roughly 25 to 35 percent of sales, and quick-service or counter formats often run a little leaner because they need fewer staff per dollar of revenue. The right number depends on your format: a wine-focused fine-diner with heavy service can sit at the top of that range and still be healthy, while a fast counter cafe that creeps past 35 percent usually has a rostering or sales problem. Track the percentage every week, not just at month end, so you can act while the week is still live.

How do you calculate labour cost percentage?
Divide your total labour cost for the period by your sales for the same period, then multiply by 100. Total labour must include more than base wages: add payroll taxes, holiday and leave accrual, KiwiSaver or pension contributions, and any bonuses, because those on-costs typically add 10 to 20 percent on top of the headline wage. If you only count base pay you will flatter the number and under-price your labour. The calculator on this page does the maths once you enter your weekly labour cost and sales.

Should labour cost include the owner or manager salary?
Include every person the business pays for the work, including salaried managers and any owner who draws a wage for working shifts. What you can reasonably separate is a pure owner profit distribution, which is a return on the business rather than a cost of running service. The cleanest approach is to count all working pay inside labour cost, then look at owner profit separately in your prime cost and profit-and-loss. That keeps the labour percentage honest and comparable to industry benchmarks.

What is the difference between labour cost and prime cost?
Labour cost is one half of prime cost. Prime cost adds your cost of goods sold, mostly food and beverage, to your total labour, and it is the single most useful control number in hospitality. Most operators target a prime cost of 55 to 65 percent of sales, so if food sits near 30 percent you have roughly 25 to 35 percent left for labour before the model gets tight. Watching labour alone can mislead you, because a low labour percentage bought with cheap ingredients that inflate food cost does not actually help.

How can I lower my labour cost without cutting service?
Attack scheduling before you attack headcount. Build the roster from your real hourly sales pattern so you are staffed to demand rather than to habit, tighten shift start and finish times around the genuine rush, and cross-train people so one absence does not force an over-schedule. Cutting a busy shift to save wages usually costs more in slow service and lost sales than it saves. The reliable wins come from matching the roster to forecast demand and from lifting sales per labour hour, not from leaving guests waiting.

How often should I check my labour cost percentage?
Weekly at a minimum, and ideally you glance at it daily during the week so you can send someone home early or call someone in before the week is decided. A month-end number tells you what already happened when it is too late to change it. A live weekly figure, read against your sales, lets you correct a heavy week on Thursday instead of discovering it three weeks later. Rostering software that shows scheduled labour as a percentage of forecast sales turns this into a habit rather than a spreadsheet chore.