Labor Cost Percentage Calculator
Enter sales, labor dollars, and labor hours for the same period. You get labor as a percent of sales, sales per labor hour, and your average cost per hour.
Net sales for the shift, day, or week you are checking.
Wages for the same period. Add overtime. Leave out salaried managers if you track them separately.
Total clocked hours for the same period, from your time clock or POS.
- Sales per labor hour
- $57.81
- Average hourly cost
- $18.50
How I use this on a Friday
I don't manage labor by staring at a percentage and sending people home. I watch sales, who's on the clock, what business actually looks like, and what's still left to get done. Sometimes cutting one person saves labor. Sometimes it means the people who stay get buried, closing takes longer, overtime shows up later, and the guest pays for it. I also don't wait until the end of the week to find out labor was bad. By then, there's nothing left to manage. The calculator gives me the percentage. My job as the GM is deciding what to do with it. Good labor management isn't about running the fewest people possible. It's about having the right people, in the right place, at the right time, and knowing when the business changes enough to adjust.
K. Pinckney, restaurant GM and founder of WRI
The math
Labor percent is labor dollars divided by sales, times 100. Sales per labor hour is sales divided by labor hours. Average hourly cost is labor dollars divided by labor hours. Use the same period for all three numbers.
Example: Your week did $18,500 in sales. The crew worked 320 hours and labor came to $5,920. Labor percent is 5,920 / 18,500 = 32%. Sales per labor hour is 18,500 / 320 = $57.81. Average hourly cost is 5,920 / 320 = $18.50.
Questions operators ask
What is a good labor cost percentage?
A commonly cited range for hourly labor is about 25% to 35% of sales, depending on the concept and how much is made from scratch. Your own trend week to week tells you more than any industry number.
What is sales per labor hour?
Sales divided by the hours your crew worked. It shows how much business each hour on the clock is bringing in. Unlike labor percent, it does not move when you give raises, so it is a cleaner way to write a schedule.
Should I include managers and payroll taxes?
Pick one way and stick with it. Many operators track hourly labor on its own, then a fully loaded number with salaries, payroll taxes, and benefits. Just do not compare one week done one way to a week done the other.
Why did my labor percent jump when the schedule did not change?
Sales dropped. Labor percent is labor divided by sales, so the same schedule on a slower week costs a bigger share. That is why you check it during the week, not after it is over.
How often should I check labor?
At least daily, and mid-shift on busy days. If you only look at the weekly number, the week is already gone by the time you see it.