The formula
Labor cost % = (wages + salaries + payroll taxes + benefits) ÷ total sales. Use the payroll for the same period as the sales, and include the owner's salary if the owner works a regular shift; otherwise your percentage looks better than the business really is.
What is normal
- Full-service restaurant: median 34.2% for profitable operators and 36.5% for all operators, benefits included (National Restaurant Association, 2025).
- Bar: 25–35% (Sculpture Hospitality, 2025, an inventory-software publisher).
- Cafe: 30–35% (Zest Specialty Coffee Roasters, 2025, indicative).
Labor alone is half the story
Add food and beverage cost to labor and you get prime cost, the number lenders look at first: 60–65% of sales for full service (Restaurant365). The prime cost calculator does both in one step.
Read the guide: Restaurant Labor Cost Percentage Including Benefits: What to Count and What Is Normal.