How To Calculate Labour Cost For Restaurants & Small Businesses 2022 | Restaurant Management

Did you know that labour is one of three big costs in a restaurant business? Today I'll show you how to calculate labour cost in restaurants...
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👀 ABOUT THIS VIDEO
Labour takes a huge chunk of money for restaurant businesses and small businesses. Which is why it is important to know how to calculate labor cost so you can see exactly how much it is taking from the pie.

But before yo even calculate your labour cost, you need to know what labour cost is. Many people make the mistake of just thinking it is how much you pay someone per hour or salary...but it is more. You need to include bonuses, payroll taxes, remittance, benefits, meals, uniform, training, and more. A lot goes into the cost of a staff, which is WHY staffing and retaining good staff is so important.

There are generally two ways to calculate labour cost in restaurants:

1. Labour as % of sales OR
2. Labour as % of total operating costs

Regardless of which you choose (I prefer method 1), the key is knowing how your labour cost compares to industry standards and benchmarks. Because if you're OVER the standard, it may mean there are things you or your business is not being efficient on, which is driving your labour cost UP. But you won't know any of this without calculating your labour cost and knowing the industry standards. Only then you'll be able to take out the magnifying glass and see where you can make changes.

So if you're a restaurant owner, restaurant manager, food entrepreneur, small business owner, and are looking to learn how to calculate labor cost and make your business more profitable, or want to learn how to start a restaurant or how to open a successful restaurant, keep on watching!
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👤 ABOUT WILSON:
I’m Wilson, your new restaurant business partner. I’m here to help turn your food and beverage concept into a reality with expert tips & tricks for success.

I’ve helped hundreds of restaurant owners and entrepreneurs create explosive Food & Beverage businesses. You don’t have to take my word for it. I’ve been awarded Top 30 Under 30, Young Entrepreneur of the Year, Top 10 Emerging Entrepreneurs, and recently a Forbes Business Council Member.

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[roro]

Thank you very much Wilson, you are God sent, you educate with precision and simplicity, thank you.

[antoniodossantos]

Very nice video 🌎 Thanks Wilson. Greetings from Colombia. The Venezuelan Immigrant writer, ecologist, entrepreneur 🇻🇪

[tonyharrell]

Awesome breakdown!! Keep the videos coming!

[antoniodossantos]

Hello Wilson... Thanks 🌎 I am looking forward to having a wonderful café...The Concept is clear...l need to learn more in other areas...

[davidfrankykurniawan]

Thanks for the explanation. So good! But how about the operational cost to produce the products? For example, water for the products, water for washing & cleaning, the gas for cooking / boiling, electricity to produce, to turn on the lamp, the wifi, the POS at cashier, etc. I think it's very important as well to be counted in the calculating the food cost. Hope that you / anyone can explain this. Really appreciate.

[imranshah]

Hi Will, really like your videos and thank you for the time and efforts you are putting to educating your RESQUEST: could you make a video HOW TO CALCULATE MENU PRICES/PRODUCT PRICE FOR TAKEAWAYS/RESTUARENT? Thank you :)

[strahinjapaunovic]

Wilson, first thanks for your efforts and amazing tips in general and especially for this video. I have one question and how to calculate labor cost for someone who wants to open first restaurant.is it correct if you calculate your labor cost first and get the monthly target according to those 30%? Just to know approximately how much profit I need to make to have labor cost not bigger than 30%. I hope I can get your answer, it would be very helpful for me. Thanks and cheers

[jo_mtl]

So helpful, , every single time in learn new things ❤️❤️ I’m about to open a restaurant in a few month thank you for all the help, , merci 🙏 beaucoup from Montréal

[erizsharper]

Sir, why do we calculate by Year and not by each month?

2nd do we compile all the cost of each labour and divided by the Plan Sale/Actual Sale?

3rd Question How can i Calculate on How many Staff do i need each day based on my Plan Sales/Last months Actual Sale? This is for scheduling

[zoeymason]

thank you very much for the education content!)

[mevanhelsing]

Nice video bro.. Even I saw ur cogs video.. Still am confused little bit.. I need u to help me out.. Can u make a video in which u take a cake or sweet and explain step by step?. Like 1st sort out ingredients then it's price per unit, rawmaterial cost, labour cost till selling price and profit(in ur style the amount we put in our pocket).. With proper step by step example.. It will be useful for me and for many..

[jimkim]

Really appreciate these helpful videos Wilson! These are gold!

[CuisinerongPinoy]

Sir can I request ? Can you show the proper format of labour cost and all content of labour cost such Bonuses, benefits etc, and how to indicate this in worksheet one by one . One more how about the Gas and water where is it include ? Thank you

[GLo]

how do I calculate the BOH labor cost per 100 meals?

[lamujeron]

iam a gm at dominos my labour is 3.0% o some times is 5.0% how can I fix it so I could get more bonus

[davidschleiss]

Wow, How do you stay in business with almost 30% labor cost? I run my restaurant at 12% to 15% labor and 26% to 28% food cost

[ebooksmaster]

It would be nice, if you told us what our labor cost should be at. Also, the music in the background is distracting, makes it difficult to hear you sometimes

[dilidulu]

Jeffery Pfeffer 1998 The Human Equation - making profit by putting people first

[businesswithsaran]

Thanks for sharing
Please speak slowly

[legalreefer]

You only make 200k on a million dollar revenue? That’s insane