Labour cost is the share of revenue taken up by staff, usually expressed as a percentage. It includes wages, contributions, overtime and everything tied to the team. If a restaurant takes €100,000 a month and spends €30,000 on staff, labour cost is 30%.
Together with food cost it forms the prime cost, the sum of hospitality’s two heaviest costs. A labour cost around 30% is a common benchmark, but it depends on the format: a fine-dining room with attentive service will sit differently from a fast pizzeria.
Keeping it in check without cutting service
Lowering labour cost doesn’t mean firing people or overloading those who stay. The healthy levers are sizing shifts to real volumes (forecasting covers by daypart), cutting wasted hours in quiet windows, and using technology to deliver the same service with less friction.
Here’s how to serve well with fewer staff.
Frequently asked questions
- How much should labour cost be in a restaurant?
- 30% of revenue is a common benchmark, but it depends on format and service level. Track it by daypart, not just as a monthly average.
- What is prime cost?
- The sum of food cost and labour cost: a restaurant's two biggest costs. Keeping both in check together is the basis of operating profitability.