Restaurant labour costs: calculate, understand and review

Labour costs need to be understood in money and relative to sales. A higher labour percentage can result from more hours, higher pay or fewer guests. The appropriate response depends on the cause.

Establish what the cost includes

Gross wages are one part of employment cost. Include relevant premiums, holiday costs, employer contributions, pension, insurance and other staff costs. Verksamt’s calculator illustrates several of these components.

Use the current employer-contribution rate for the person and payment period. The full rate does not apply to everyone; age and temporary reductions can affect it. Check the Swedish Tax Agency’s current tables rather than applying one assumption to the entire team.

Decide how agency staff and the owner’s work are treated in internal reporting. An owner working without a recorded salary can make the operation appear less labour-intensive than it is. A separate estimate for that work can be useful, clearly distinguished from booked costs.

Calculate the percentage for the same period

Labour percentage = labour cost ÷ sales excluding VAT × 100.

Hypothetical example: monthly labour cost is SEK 320,000 and net sales are SEK 1,000,000. The labour percentage is 32%.

If cost remains unchanged but sales fall to SEK 800,000, the ratio becomes 40%. There has been no increase in the cost amount; the sales base has fallen. Examine both sides of the ratio before changing staffing.

Match costs attributable to the period with that period’s sales. A salary payment leaving the bank may relate to the previous month’s work. Ask the accountant to help allocate costs to the right period.

Separate planned cost from recorded results

The rota’s cost is an estimate based on shifts and settings. Clocked time provides a later record but still requires review. Payroll and accounting results may include additional premiums or corrections.

Label reports clearly as planned, provisional or reconciled cost. Ongoing views in Vendion Personal and Analytics++ support review when the underlying records are correct, while monthly reconciliation remains necessary.

Find an explainable difference

Review comparable shifts. Were there more hours, more premiums, sickness with replacement cover, training or unexpectedly weak sales? Include work before and after guests arrive. Preparation and closing are not unnecessary simply because the POS is quiet.

Choose a specific improvement: a better handover, preparation, less duplicated entry or a menu spreading kitchen demand more evenly. Working-time changes must follow agreements and working-hours rules. Sending someone home does not automatically remove the wage cost.

Review the whole result

Track waiting time, workload and service alongside money and hours. A lower labour percentage accompanied by lost guests or unreasonable pressure is not sustainable improvement.

Ingredient and labour costs can also be tracked together as prime cost. In a hypothetical example, SEK 320,000 in labour and SEK 280,000 in ingredient consumption against SEK 1 million of net sales produces 60%. Rent, other costs and profit still need to fit within the balance; the percentage does not guarantee profitability.

See Vendion live using one of your own weeks to follow the relationship between the rota, hours worked and sales.