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Understanding restaurant labour cost

Labour cost percentage is one way to understand how staffing expense relates to sales, but it should never be the only measure of a healthy operation.

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The basic formula

Labour cost percentage = labour cost ÷ revenue × 100. Use consistent periods and decide which employer costs to include.

Read the figure in context

Service quality, sales mix, seasonality and workload influence what a sustainable percentage looks like.

Use it alongside your roster

Compare expected demand and staffing coverage rather than cutting hours blindly.

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