Labor Cost & Scheduling

How Much Should Labor Cost Be in My Restaurant?

Labor is your biggest controllable expense. In 2025 most independents should target 28–32% of sales. Use real benchmarks, sales-driven scheduling, and our Labor Planner to hit the number without cutting service.

RPS Guide • Built for operators who actually run the shift
Reading time: about 7 minutes
Labor Cost Control

The short version

In 2025, target 28–32% labor cost for most concepts. A restaurant doing $60,000 monthly sales should spend $16,800–$19,200 on labor. Over 35% is a major profit leak — every extra 1% on $720k annual sales costs you $7,200.

Labor cost is 70% scheduling math, 30% execution. Get the hours wrong and you’re either overpaying or burning out your best people.

The real math: labor cost breakdown

True labor cost includes more than just wages:

  • Hourly wages + overtime
  • Payroll taxes (7.65% FICA)
  • Workers’ comp (typically 2–6%)
  • Benefits, vacation, training
  • Salaried managers and owners

Add them up and divide by total sales (not just food sales). Most operators understate their real number by 3–5 percentage points.

Factors that push labor cost high in 2025

1. Poor scheduling

  • Same hours every day instead of matching sales patterns
  • Overstaffing slow shifts (Tuesday lunch, etc.)

2. High turnover

  • Constant training eats 4–8% of labor budget

3. Overtime creep

  • One or two people working 10–15 extra hours per week adds thousands annually

Quick labor cost audit (10 minutes)

Step 1: Calculate your true percentage

  • Pull last 4 weeks of payroll + taxes + benefits
  • Divide by total sales for the same period
  • Use our Prime Cost Calculator

Step 2: Compare to benchmarks

  • QSR / Fast casual: 25–30%
  • Full-service casual: 30–34%
  • Fine dining: 34–38%

Step 3: Fix the gap

  • Build sales-based schedules with the Labor Planner
  • Cross-train staff
  • Standardize opening/closing duties from our templates

How to lower labor cost without losing service

  • Use sales-driven scheduling. Forecast covers by daypart and staff accordingly — operators who do this cut 3–6% in 60 days.
  • Cross-train aggressively. One server who can also run food or bus tables saves 4–8 hours per shift on slow days.
  • Standardize tasks. Print our opening/closing checklists so shifts run faster and need fewer bodies.
  • Track overtime weekly. Set a hard cap and review every Monday.

Where the RPS tools plug in

  • Labor Planner: Build schedules against projected sales before the week starts.
  • Prime Cost Calculator: See the combined food + labor picture in one view.
  • Opening & Closing Checklists: From the templates library — standardize tasks so fewer hours are needed.
Open Labor Planner Prime Cost Calculator Download Checklists

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FAQs

Why is my restaurant labor cost over 35 percent?

In 2025 the average full-service casual restaurant runs 30–34%. Over 35% almost always comes from scheduling the same number of hours every day regardless of sales. For a restaurant doing $720,000 annually, every extra percentage point costs $7,200. Run a 4-week sales forecast and rebuild your schedule to match projected covers using the Labor Planner — most operators drop 3–5 points in the first 30–45 days.

How do I schedule fewer hours without losing sales or service quality?

Stop building schedules by “what we always do” and start with sales data. Forecast covers by daypart, then apply a labor standard (e.g., 1 server per 25–30 covers during peak). Cross-train staff so one person can cover multiple stations on slower shifts. Restaurants that switch to sales-driven scheduling typically reduce labor 4–6% within 60 days while guest satisfaction scores stay the same or improve.

What should labor cost be for a 50-seat full-service restaurant?

Target 30–34% of total sales. On $50,000 monthly revenue that means $15,000–$17,000 in labor. Anything consistently over 35% is a red flag. Use the Prime Cost Calculator to factor in taxes, benefits, and workers’ comp so you see the true number, then adjust staffing with the Labor Planner.

How can I stop paying so much overtime in my restaurant?

Overtime is usually a forecasting problem, not a people problem. Build schedules two weeks in advance based on historical sales and set a hard cap on extra hours. Require manager approval for any overtime. Restaurants that implement this discipline typically cut overtime from 8% of labor dollars down to under 2%, saving $8,000–$15,000 per year on a $300k labor budget.

How do I calculate true labor cost including benefits and taxes?

Add base wages + overtime + 7.65% FICA + workers’ comp (2–6%) + health insurance + vacation pay + training costs, then divide by total sales. Many operators think they’re at 28% when the real number is 33–34% once everything is included. The Prime Cost Calculator automatically factors these in so you get an accurate weekly picture.