Labour Cost Percentage
Also called: labor cost percentage, labour cost %, labour costing
What is Labour Cost Percentage?
Labour cost percentage is total staff cost — wages, overtime, bonuses, statutory contributions and staff meals — expressed as a percentage of sales for the same period. It measures how much of every rupee of revenue goes to the people who produced it.
Why Labour Cost Percentage matters
Labour is the second largest controllable cost in most restaurants and the one that reacts fastest to a rostering decision. Two outlets with identical menus can differ by five points of labour purely on how shifts are planned.
Labour Cost Percentage formula
Labour cost % = Total labour cost ÷ Sales × 100
Include employer PF and ESI contributions, not just take-home pay.
How Labour Cost Percentage works in practice
Measure it by day-part, not just monthly. A healthy monthly average routinely hides a badly overstaffed weekday lunch, and only the day-part view makes that visible.
Worked example
₹2,40,000 of total staff cost on ₹9,50,000 of sales is a labour cost of about 25%.
Common mistakes with Labour Cost Percentage
- Counting take-home pay only and ignoring employer contributions.
- Rostering to a fixed headcount rather than to expected covers.
- Judging the month as a whole instead of by shift and day-part.
Frequently asked questions
Quick-service formats generally run leaner than full-service ones; the useful comparison is your own trend by day-part.