How to reduce restaurant labor cost
Labor is usually your second-biggest cost after food — and the one most likely to creep. Here's where it should land, and how to bring it down without losing your best people.
A healthy restaurant labor cost is 25% to 35% of revenue (full-service tends toward the higher end, quick-service the lower). The fastest way to lower it is matching your schedule to actual demand, controlling overtime, and reducing turnover — not cutting heads.
What counts as labor cost
Labor cost is every dollar you spend on your team: wages, salaries, payroll taxes, benefits, and overtime. As a percentage, it's that total divided by your revenue for the same period.
Benchmarks by restaurant type
| Restaurant type | Typical labor cost | Target |
|---|---|---|
| Quick service / fast casual | 25-30% | ~28% |
| Casual full-service | 30-35% | ~32% |
| Fine dining | 30-35% | ~34% |
| Bars & taprooms | 25-30% | ~28% |
6 ways to lower it without cutting your team
Let ResBizAI manage your labor cost
ResBizAI builds shifts around your real demand, flags overtime before it happens, and shows your labor cost % every morning — so you stay on target without the spreadsheet.
Start free →Frequently asked questions
A healthy restaurant labor cost is 25-35% of revenue. Quick-service and fast casual tend toward the lower end (25-30%), while full-service and fine dining run higher (30-35%) because of more staff per cover. If you're consistently above 35%, your schedule is likely out of step with demand.
Labor cost percentage = (Total labor cost / Total revenue) x 100. Total labor includes wages, salaries, payroll taxes, benefits, and overtime. For example, $12,000 in labor against $40,000 in revenue is a 30% labor cost.
Match your schedule to actual sales demand instead of habit, eliminate avoidable overtime, reduce turnover by keeping good people, cross-train staff to flex between roles, and watch labor as a daily number so you can adjust before it's too late. Cutting heads is usually the last resort, not the first.
Over-scheduling relative to demand is the most common cause — staffing slow shifts like busy ones. Overtime and high turnover are close behind. All three are manageable once you can see your labor cost in real time instead of at month-end.