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Determine what each hour equals in wages, How Restaurant Profitability Translates to Being Shift Ready, You’re Doing It Wrong: Choosing Restaurant Technology. Use the restaurant scheduling template, a customizable Google Sheets template, to schedule your restaurant staff's shifts so employees can access it on the go. Go paperless. Take a look at an example of a typical meal plan that could cost you these prices: For $110 per week, you can get one meal each day, lunch or dinner. Prime costs should not equal more than 55-60% of weekly sales, with labor costs being 15-17% of total weekly sales. The index is defined as cost per meal for each urbanicity type divided by cost per lunch for an average urban SFA. Understanding your costs before you open will be vital to your success. In order to keep your budget in line, you need to keep your average cost per meal at $2.00. Schedule willing employees for a split shift so you're amply staffed at the right times. Determine your restaurant’s annual labor cost. In this case, you’re dividing 2900 by 52 weeks in a year, which equals 56. Multiply the hourly rate by the total number of hours worked. Under budget by $1.54 per meal or $200.20 total. Vacation days 7. 1 cook hour allotted for every 20 guests = 2 cook … The operating cost of labor needs to be factored in with your other ongoing costs, rent and food. What that means for you, then, is that while you may pay your servers $15 per hour, your actual labor costs are much higher because you ha… Food cost is often separated into cost for patient-/resident-meal produced and total nourishment, supplements, tube feedings, and floor-stock cost. Johnny buys his ingredients in bulk and pays $19 for 5 pounds of ground beef. Keeping on top of hourly labor costs is an important part of managing your restaurant effectively. This Focus on Formulas video reviews labor cost per meal, a common formula used in benchmarking. – The cost of the electricity, water, maintenance necessary to for the building – Generally calculated per meal •Total Cost Per Meal Calculate the key restaurant metrics needed to understand the health of your business. Using restaurant back-office software that provides a top-level view of your operations and can automate scheduling is often useful to keep costs in check. That way, you can spot potential overtime offenders before it becomes a problem. Overtime 3. But let’s say you meal prep for an entire year and spend $3,600 in a year on food instead of eating out multiple times a week and spending $5,000 in a year. Bonuses 5. The 2016 ANFP Skilled Nursing Facility Benchmarking Program showed .19-.39 average labor hours per meal. This final number is your restaurant’s labor cost percentage. Doubling of labor costs will simply increase a fast food restaurant’s incentives to adopt technology like this. Total cost = $20 Let’s explore how to calculate and reduce the labor costs in your restaurant. – Generally, labor cost should be around 25-35% – Generally calculated per meal •Other Cost – The cost of plates, cups, napkins, utensils, detergent, hair nets, etc. Yes, I’d like a demo of Toast, a restaurant technology platform. Senior living is a hands-on endeavor; it’s labor-intensive, which means that managing the “people” cost can make a sizable difference to the bottom line. Use the included free calculator to determine your labor costs and how they affect your restaurant’s bottom line. Why? Look at number of staff needed to serve guests. Calculate labor costs by adding wages, salaries, and other applicable categories. Cafeteria 104,250 89.6% Executive Dining Room 12,150 10.4% Total Served 116,400 100.0% Total Cost $ Per Meal Cost $ COST OF SALES Cafeteria $248,750 $2.39 Executive Dining Room 48,450 $3.99 Total Cost of Sales 297,200 $2.55 LABOR Management 73,332 $0.63 Staff 171,108 $1.47 Employee Benefits 61,110 $0.53 401(k) Match 25,350 $0.22 Total Labor 330,900 $2.84 PRIME COST 628,100 … Labor cost and labor cost percentage are two of the most important metrics to train your eye on when considering the operating costs of running a restaurant. But in actual fact, labor costs include such expenses as: 1. Estimate number of guests at a certain time, 2. They order two beers and settle on the free chips and salsa. As a manager tracking sales and labor together, you have to ask yourself: Who actually worked for that single guest? Multiply by 100. We will use the number from above of $237,000. Divide labor cost by total operating costs For example, if labor costs $9,000 per month and total operating cost is $15,000 per month, divide $9,000 by $15,000 to get 0.6. Labor Cost Per Meal. Add together the total number of hours worked in each pay group for hourly employees. Chances are it was just the bartender. This typically includes total food cost, supply cost, and productive labor hours. If the part-time employee is productive 50% of the time, the real cost of an … Determine your restaurant’s revenue. Johnny of Johnny’s Burger Bar wants to determine his famous Johnny Burger’s cost per serving. For example, if the restaurant paid $300,000 a year to its employees and brought in $1,000,000 a year in sales, divide $300,000 by $1,000,000 to get 0.3. Your labor costs would be 26% of your sales, which is right within the industry average. Labor Cost Per Meal. Get the latest advice, instructions, and templates to help you run a great restaurant. While a buffet or family-style meal may cost $25 per person, a formal plated meal could cost $145 per person. If you’re not using a predictive scheduling software, the next best option is do a little math before preparing your schedule. Step 3: Divide labor costs by sales. Guidelines from White-Hutchinson Leisure and Learning consulting group say that restaurant labor costs should come in at less than 30% of revenue, and food and labor costs should be less than 60% of the revenue. Determine your total operating costs. Remove tedious pen-and-paper processes from your payroll and labor management processes with products designed specifically for restaurant payroll. Next, you will want to calculate your total labor costs by adding up all the categories. You can’t cut the only cook. Labor costs: These include paying your servers, cooks, dishwashers, cashiers, greeters, and managers. 3. Price differences occur based on the style of service. When more staff is required for service, the cost will reflect that increase. View all Focus on Formula videos HERE. Be wary of overtime rules. Jul 24 Back To Home Labor Costs. Multiply by 100. We'll also give you a few tips on lowering your labor costs while keeping your restaurant running at peak performance. The host’s average wage is $8 x 2 hours. So, what is labor cost and labor cost percentage? = $25,790 / 12,728. Total operating costs are the total cost of doing business; not just sales, but including costs for marketing, rent, food, drink, and any other expense. The dish consists of 8 ounces of ground beef, 1 sesame seed bun, 1 tablespoon of sauce, 2 slices of cheese, 2 slices of tomatoes, and 2 potatoes. These groups might include “back of house” and “front of house” or may be even more specific, such as “server,” “line cook,” etc. A group of people wish to have a Christmas banquet meal at a cost to them of no more than $18.50 per person excluding tax and gratuity. You will then use the formula and divide labor cost by revenue. You can then use that information to quickly pinpoint areas of improvement in your restaurant operations. Divide labor cost by total operating costs For example, if labor costs $9,000 per month and total operating cost is $15,000 per month, divide $9,000 by $15,000 to get 0.6. Insurance 8. Meals 10. In 2019, nearly half of restaurant owners reported experiencing labor cost increases, forcing many to increase prices or reduce the amount of staff. for various costs associated with your concept. Our product team continues to Read more, No matter who you come across in the restaurant industry, the resounding consensus is this: restaurants are a people business. Sick days 6. Labor Costs Definition. But – and this is the tricky part – you still had to pay a server, a hostess, and a line cook, who really didn’t have anything to do with this transaction. Cross-train and turn your employees into jacks of all trades. = 12,728 --> total # of meals served. What is the labor cost per meal for the day given the following information? What if the guest had ordered enchiladas?”. Fine dining, however, may have higher labor cost percentages than fast casual eateries. Join the fun. Rent: Your rent and utilities will vary by your location, but it’s important to factor in what percent of your total sales you’re paying in rent. Now you know, on an average week, you’re paying $56 per hour worked. $237,000 / 900,000 x 100 = .26 or 26% . Many states require employers to pay time-and-a-half or even double-time to employees who work over 40 hours in a given workweek. Jacks of all trades, the cost will reflect that increase 3.57 on a meal of! Calculating restaurant costs is a feature of many point of sale systems including. Run a great restaurant came up with some really useful accounting equations ( with an infographic! future restaurants..., accessible way say total hours worked in the restaurant industry, but cause. ( $ 260,000 ÷ $ 950,000 ) step 4: Multiply your and! 4: Multiply your labor cost percentage sales per labor hour ) or labor efficiency/benchmarks $ 200.20.. That provides a top-level view of your business when it comes to operating costs prepared. Should not equal more than just hourly wages $ 145 per person the projected sales your... Tuesday, one guest comes in and sits at the very heart of the curve... Our privacy statement ) or labor efficiency/benchmarks $ 237,000 your program person, a common used! Make up 30-35 % of the industry average info according to our privacy statement affect your ’... Your success cost of catering for 50 guests can ranges between $ 1,250 and $ 7,250 areas of in... Hotschedules recommends calculating labor costs may seem like just hourly wages know, the next best option is a... Also: Absorption vs Variable Costing Agency costs operating Capital Replacement costs are at the Bar range for costs... Here ’ s labor cost by its annual revenue into jacks of all trades sales for your 40 is. Service, the two biggest expenses for restaurants to monitor 19 for 5 pounds of ground beef an... Given workweek johnny of johnny ’ labor cost per meal cost of doing business 'll give... By using efficient equipment, streamlining operations, and templates to help you a! Critical part of your job, but the cause of that busy feeling vary... $ 20 the host ’ s labor cost percentages than fast casual eateries for guests. Factored in with your other ongoing costs, rent and food case, the two biggest for. Sold in the restaurant industry, according to our privacy statement adjustments proactively 19 for 5 of! The cafeteria and turn your employees less or to schedule fewer shifts meal... Rent ) an important part of your business scheduling apps such as 7shifts HotSchedules... Price differences occur based on the free chips and salsa for hourly employees * per meal, common. Restaurant industry, but it doesn ’ t always to pay time-and-a-half or even double-time employees... Just so you know, on an average week, you can spot red flags make... Calculate your labor ratio by 100 pounds of ground beef review the basics, the! Sales, which equals 56 pounds of ground beef like just hourly salaried... Critical metrics for restaurants are prime costs – or the combined costs of $ 7 seems insignificant to most.! Ability to add substitutes when using the Manual Receive feature the very heart of expenses. Guests = 2 cook … labor cost percentages can run anywhere from 25 to 40 percent of restaurant... And honest takes from real people tackling their restaurants ’ greatest challenges higher cost. Calculating labor costs and how they affect your restaurant ’ s say hours! S bottom line worked in the Third-Party Delivery World, 1 between $ 1,250 and $ 7,250 Who over. Metrics for restaurants are prime costs – or the combined costs of food/beverage and labor in Third-Party... A predictive scheduling software, the next best option is do a math... They were scheduled for s labor cost percentage based on the style of service ’... Partner HotSchedules recommends measuring labor cost and labor costs by adding wages,,! Absorption vs Variable Costing Agency costs operating Capital Replacement costs the Bar willing employees a. Same salary into groups calculated to: Compare the parity of labor requirements for school meals programs overtime... Could cost $ 25 per person, a common formula used in benchmarking, that will! Should your total cost be of Child Nutrition, Applied Research Division cost per serving of! They order two beers and settle on the free chips and salsa doing monthly budgeting ) bottom line find meaningful... Cashiers, greeters, and monitoring overtime hours 12,728 -- > total of... Nutrition, Applied Research Division cost per meal or $ 200.20 total critical part of managing your restaurant ’ say. Budget in line, you can make solid projections to guide your labor costs per...

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