What is labour cost percentage?
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TL;DR
What your team cost as a share of your sales — the number to rota against.
A quiet Tuesday with four people on the floor and a Saturday rush with three both cost you money — one in wages, the other in lost sales and tired staff. Labour cost percentage is how you see it.
The formula
Labour cost % = total labour cost ÷ net sales × 100
As with prime cost, "total labour" includes employer's National Insurance, pension contributions and holiday pay — not only hourly wages.
A second number tells you how productive those hours were:
Sales per labour hour = net sales ÷ hours worked
A worked example
On a Friday you take £3,200 before VAT. Your team worked 48 hours at an average total cost of £14.50 an hour: £696.
Labour is 21.8% of sales, and each hour worked brought in £66.67.
What is a good labour cost?
Many restaurants and cafés aim for roughly 25–35%; counter-service businesses often run lower than full table service. Your own trend matters most.
Why it matters
- It shows which shifts are overstaffed and which are stretched.
- It turns the rota from a habit into a decision based on when you actually trade.
Common mistakes
- Rota by habit. If Monday lunch has been dead for a month, the rota should know.
- Leaving out the extras. Employer's NI, pension and holiday pay add a real share on top of wages.
- Only looking at the week. A good week can hide two bad days. Look by day and by hour.
Tracking it in DUMA
The Labour vs sales report shows labour cost, labour % and sales per labour hour, from the rota and the hours your team clocked. Sales by hour shows when in the day you trade, so you can build the rota around it.
Questions and answers
Should I use scheduled or actual hours?
Actual hours — what people clocked. Comparing the two is useful in itself: a gap means shifts are running long.
Does labour cost include agency staff?
Yes. Anyone you pay to work in the business counts, however they are paid.
What is sales per labour hour?
Net sales divided by hours worked. It shows how much each hour of work brings in, and is a good way to compare shifts of different lengths.