What's a healthy labor cost percentage for restaurants & food service?
Short answer
For restaurants & food service, a healthy labor cost percentage is around 28–35%. It's the range most lenders, acquirers, and consultants use as the "healthy" band for restaurants & food service.
Real peer data
Community median publishes once we have 5+ anonymous submissions from restaurants & food service. Currently at 0. Run your numbers below to help build it — your ratios are shared, your business name and dollar amounts are not.
Formula
Labor Cost (%) = (Wages + Payroll Taxes + Benefits) / Revenue × 100
Add up all wages, payroll taxes, and benefits for the period. Divide by total revenue. Multiply by 100.
Why labor cost percentage matters for restaurants & food service
Labor cost is the second-largest controllable expense after food. Most healthy restaurants run 28–35% labor cost. Combined with food cost, this gives you 'prime cost' — the number that decides whether you're profitable.
Understanding your labor cost percentage in the context of restaurants & food service lets you see whether you're mid-pack, exceptional, or at risk — before your bank or accountant tells you.
People also ask
Common questions about labor cost percentage for restaurants & food service
What is a good labor cost percentage for restaurants & food service?+
For restaurants & food service, a healthy labor cost percentage is around 28–35%. The exact number depends on scale, region, and business model, but this is the range most banks, acquirers, and industry consultants treat as "healthy."
How is Labor Cost Percentage calculated?+
Add up all wages, payroll taxes, and benefits for the period. Divide by total revenue. Multiply by 100.
Why does labor cost percentage matter more for restaurants & food service?+
Labor Cost Percentage is one of the top metrics used to underwrite restaurants & food service. Lenders, buyers, and even landlords tend to check it before signing anything.
What's the fastest way to improve my labor cost percentage?+
Run your numbers through CFO Grade — the free memo pinpoints the two or three levers that move labor cost percentage fastest for a business your size, in your industry. Common fixes for restaurants & food service include pricing, cost discipline, and cash-cycle tightening in that order..
See your labor cost percentage — graded against restaurants & food service peers.
Paste your P&L. CFO Grade computes this — plus 23 other ratios — in seconds, with the restaurants & food service benchmark already loaded.
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