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Are You Over-Staffed?

$30,000 labor on $100,000 revenue is a 30% labor cost. With a 30% food cost assumed, prime cost (labor + food) is 60%, leaving 40% for occupancy, overhead, and profit. Restaurants often target prime cost under 60-65%.

Results

Visualization

Cashbizly provides illustrative business estimates only. Results depend on your inputs and assumptions and are not accounting, tax, or legal advice. Consult a CPA or financial advisor before major decisions. Tax-year figures (mileage, QBI, SEP, etc.) are labelled by year and should be verified at IRS.gov.

How It Works

Labor Cost % = Labor / Revenue x 100. In restaurants and personal services it is the dominant controllable cost after food. Prime cost = Labor% + Food% is the key health metric (target ~60-65%). This is standard hospitality accounting.

What Should You Do?

Scenario 1: labor at 35% with food 30% gives 65% prime — thin margin, tighten scheduling. Scenario 2: raising revenue 10% (to $110k) with flat labor drops labor% to 27.3%. Scenario 3: overtime spikes labor% — monitor with our Overtime Cost tool.

Frequently Asked Questions

What is a good labor cost %?

Restaurants often 25-35%; full-service leans higher. Compare within segment.

Why track prime cost?

Labor and food together are ~60% of revenue; managing the pair is where restaurant profit lives.

How do I lower it?

Scheduling to demand, cross-training, and controlling overtime — not understaffing service quality.

Authoritative References

Investopedia — Prime Cost — Prime cost (labor + materials) in hospitality.
SBA — Restaurants — Restaurant labor and cost benchmarking.