Labor cost percentage = (total labor expense ÷ total revenue) × 100. Benchmarks vary by service model: QSR typically runs 25–35%, casual dining 30–40%, fine dining 35–45%. Rising labor cost percentage signals either rising wage rates, falling revenue, or scheduling inefficiency. MenuMargin tracks food cost percentage as its primary automated metric; operators add labor cost entries manually to view prime cost and assess total labor efficiency alongside food cost performance.
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Labor Cost Percentage
Total labor expense (wages, payroll tax, benefits) divided by total revenue. A core operating ratio.
Related terms
- Prime Cost — The combined total of food and labor costs, a primary driver of restaurant profitability and operational health.
- Food Cost Percentage — The ratio of ingredient cost to menu price, expressed as a percentage. A key profitability benchmark.