What Is Labor Cost Percentage?
Labor cost percentage measures how much of your revenue goes toward paying your team — wages, payroll taxes, and benefits included. For full-service restaurants, a healthy target typically sits between 28–35%, though it shifts by concept and daypart mix. Tracking it weekly (not just monthly) lets you catch scheduling drift before it erodes margins.
The Formula
> Labor Cost % = (Total Labor Cost ÷ Total Revenue) × 100
Fields you need: - Total gross revenue for the period - All hourly wages paid - Salaried manager allocations for the period - Payroll taxes and any benefits you carry
Worked Example
A 60-seat neighborhood bistro runs $42,000 in revenue for the week. Hourly wages total $9,800, manager salary allocation adds $2,100, and payroll taxes/benefits come to $1,400. Total labor = $13,300.
$13,300 ÷ $42,000 × 100 = 31.7% labor cost
That lands inside a healthy range. If revenue had been $38,000 for the same schedule, labor would jump to 35% — a margin warning worth acting on before next week's schedule is posted.
Why It Matters to Your Margins
Labor is typically your second-largest cost after food. A 2-point improvement on a $2M annual restaurant is roughly $40,000 back in your pocket. The problem is that most operators only see the number after payroll closes — too late to adjust the schedule that caused it.
How Hubstaurant Tracks This Automatically
Hubstaurant pulls revenue data from your POS and combines it with scheduled hours to give you a projected labor cost percentage before the week starts. Its automatic scheduling engine builds shifts from staff availability while respecting your labor target, so you're not eyeballing a spreadsheet at midnight.
Per-server performance analytics show you which shifts are overstaffed relative to covers, and AI forecasting flags weeks where a local event or seasonal pattern is likely to move your revenue — so your schedule adjusts proactively, not reactively.
Dedicated scheduling apps like 7shifts do a solid job managing availability and shift swaps. Where Hubstaurant adds a layer is connecting that schedule directly to your POS revenue and food-cost data in one system, eliminating the manual reconciliation step operators usually do in Excel.
Stop Calculating It Manually
Ready to see your labor cost percentage update in real time — without a spreadsheet? Start your free Hubstaurant trial and let the platform do the math while you run your restaurant.