The previous course built the schedule. This one puts a price on it. Labor is usually the second largest line in a restaurant, it is the one you decide fresh every single week, and it is the one most owners track with a number that is quietly wrong.
🧾 Wages are not the cost
What you pay an employee and what that employee costs you are different numbers, and the gap is bigger than most people expect. The full list:
- Wages and salaries. The visible part, and the only part most owners count.
- Payroll taxes. Your share, on every hour worked. Not optional and not small.
- Workers' compensation insurance, priced by payroll and by how risky the work is. Kitchens are not a low-risk category.
- Benefits, if you offer them: health contributions, paid time off, meals.
- Overtime premium. The extra half on top of the regular rate. Topic 3.
- Training hours. Two people on the clock doing one person's job, for the first week.
- Recruiting. Posting, interviewing, and your own hours. It belongs here even though it never appears on a payroll report.
A useful habit: whenever you think about someone's wage, mentally add a meaningful percentage on top for taxes and insurance. Work out your own multiplier once, from a real month, and use it every time you consider adding a shift.
📊 The percentage, and what it is worth
Labor cost percentage is labor divided by sales for the same period. It is the standard measure, it is useful, and it is easy to misuse:
| What people compare | The problem | Better |
| My percentage against an industry figure | Full service, counter service and bars are different businesses. So are different states | Compare yourself against yourself, last month and last year |
| This week against last week | Weather, holidays and one large party distort a single week | A four-week rolling view, plus the same week last year |
| The total only | Hides that the kitchen is fine and the floor is overstaffed, or the reverse | Split it: kitchen, floor, management |
| Percentage alone | A great sales week can hide sloppy scheduling | Look at hours too. Hours are the thing you actually control |
As a rough orientation, table-service restaurants often run labor somewhere around a quarter to a third of sales, with counter service lower and fine dining higher. Treat any published number as a direction, not a target — your rent, your menu and your local wages move it more than your discipline does.
🍳 The one number above it
Labor on its own is half a picture. The number that decides whether a restaurant survives is prime cost: food and beverage cost plus total labor cost, together, as a percentage of sales.
It matters because the two trade against each other. Cheaper ingredients that need more prep move cost from food to labor. A pre-portioned product does the reverse. Judging either one alone leads you to congratulate yourself for a saving you did not make. Everything else in the business — rent, utilities, insurance, your own income — is paid out of what prime cost leaves behind, which is why it is the first number to look at and the subject of topic 6.
🧭 What this course covers
Building an hours budget before you build a schedule (topic 2), what the law obliges you to pay and where it goes expensively wrong (topic 3), getting more from the hours you already pay for instead of cutting (topic 4), what every departure costs you and which causes are fixable (topic 5), and the fifteen-minute weekly review that catches all of it in time to act (topic 6).
One thing this course will not do is tell you to cut hours. Cutting is easy and it is usually the fourth-best option; three cheaper ones come first, and they are topics 2, 4 and 5.