Labor cost percentage calculator.
Enter your monthly wages (including taxes and tips paid out) and monthly revenue (net of VAT). See labor cost percentage — and compare to the 25-35% restaurant target.
Monthly totals
Defaults work for most small shops in the EU.
Labor cost %
Labor cost is the second-biggest line in a cafe P&L. Most owners under-measure it.
Labor cost percentage isn't just hourly wages times hours. It's TOTAL labor cost — wages, employer taxes, benefits, tips you pay out from the till — divided by your real net revenue (after VAT comes out).
The formula
Labor cost % = (wages + tips paid out) ÷ (gross revenue ÷ (1 + VAT))
Healthy ranges
Quick-service cafe: 20-30%. Full-service cafe with table service: 30-40%. Fine dining: 35-45%. If you're a small cafe with one barista and you're at 40%, you're either over-staffed, under-priced, or both.
Why "we're busy but not profitable" usually means this
Owners get busy and hire more help to keep up. But if the new wages aren't matched by a price increase or a productivity boost, labor cost % creeps from 28% to 35% in three months — and the busy month makes less profit than the quiet one did.
What to do
Either raise prices to absorb the higher labor cost, or get more output per labor hour (better prep, simpler menu, faster equipment). Don't just cut hours — that usually drops revenue more than it drops cost.