How Do You Figure Labor Cost In A Restaurant?
Labor is one of the largest expenses of a restaurant. Therefore, a restaurant owner or manager must understand exactly how much the restaurant’s labor costs during each pay period. He also needs to know know the percentage of sales that goes to labor expenses. Besides the hourly wages and salaries of the employees, many other expenses must be included in the labor cost, such as payroll taxes and benefits that the restaurant pays. Add up all of the components of the restaurant’s labor cost for the pay period. Besides salaries and hourly wages, include other expenses the restaurant pays for that are associated with labor cost. Examples include payroll taxes, unemployment insurance, disability insurance, medical benefits and any other benefits the restaurant pays to its employees. This will result in the total labor cost for the pay period. Add up all of the revenue during the pay period. Use the pre-tax revenue figures when tallying the revenue because sales tax is not considered revenue
