Labor Cost Percentage Calculator
Divide total labor cost by sales to get your labor cost percentage — the benchmark that tells you if staffing is in line with revenue.
How it works
Labor cost % = (wages + payroll tax + benefits) ÷ total sales × 100
Labor cost percentage measures fully loaded labor — wages plus payroll taxes and benefits — against the sales it produced. It is one half of prime cost and the fastest read on whether you are over- or under-staffed for the volume you are doing. Full-service restaurants typically run 25–35%; quick-service can be lower, and it climbs fast when a shift is scheduled for sales that never show up.
Worked example
A week with $9,000 in wages and $2,000 in payroll tax and benefits totals $11,000 of labor. On $40,000 of sales that is 11,000 ÷ 40,000 = 27.5% labor cost — comfortably inside the typical range, and each labor dollar generated about $3.64 of sales.
Frequently asked questions
Should labor cost include payroll taxes and benefits?
For a true picture, yes. Fully loaded labor adds employer payroll taxes, benefits, insurance and paid time off to gross wages — often 10–20% on top of wages. Wages-only figures understate what staffing really costs.
What is a good labor cost percentage?
Full-service restaurants commonly run 25–35% of sales; quick-service and counter-service tend lower. The right number depends on your service model — the trend over time matters more than any single benchmark.
How is this different from prime cost?
Labor cost percentage covers labor alone. Prime cost adds cost of goods (food and beverage) to labor, giving the combined figure most operators manage to — usually a target around 60% of sales or less.
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Educational estimate, not financial advice.