How Do You Calculate Labor Cost In Restaurants?
Controlling costs can be an important part of operating a successful business, including a restaurant. Calculating your restaurant’s labor costs can help establish its relationship to your overall operating expenses and show you whether you are spending too much or too little on labor. Calculating your labor costs is not difficult. Some accounting systems require it to be calculated once a day; others use different time periods. Multiply the number of hours worked by each employee during the period you are calculating by each employee’s hourly rate. Do this for all of your hourly employees. In some restaurants, you may need to calculate labor costs every day. In other restaurants, you may need to calculate labor costs per week or month. Add the employee totals together to calculate your hourly expenses. Do not include tips or other gratuities. Make a note of this number. Divide the annual salary of any salaried employees who worked by 52 to establish a weekly rate. In some restaurants,
