Updated October 13, 2026.
The formula
Labour cost % = labour cost ÷ net sales x 100
- Labour cost: wages for the hours worked, including overtime and stat holiday pay. For a full picture, add employer costs: CPP and EI contributions, vacation pay and WorkSafeBC premiums.
- Net sales: sales before tax, after discounts, without tips.
- Decide whether salaried managers and the owner’s own pay are in. Either is fine; keep it the same every month so the trend means something.
Three ways to measure it
| Version | Labour from | Sales from | Good for |
|---|---|---|---|
| Planned | The schedule | Forecast | Building next week |
| Daily | Scheduled or clocked hours | Yesterday’s actual sales | Spotting a bad day early |
| Period | Payroll, with employer costs | The month’s sales | Your P&L and prime cost |
Worked example: one week in a café
Forecast sales for next week, from the average of the last few same weekdays:
| Day | Forecast sales | Scheduled hours | Labour cost (avg $20/h) | Labour % |
|---|---|---|---|---|
| Mon | $2,400 | 34 | $680 | 28.3% |
| Tue | $2,200 | 36 | $720 | 32.7% |
| Wed | $2,500 | 34 | $680 | 27.2% |
| Thu | $2,700 | 36 | $720 | 26.7% |
| Fri | $3,300 | 42 | $840 | 25.5% |
| Sat | $3,800 | 46 | $920 | 24.2% |
| Sun | $3,100 | 40 | $800 | 25.8% |
| Week | $20,000 | 268 | $5,360 | 26.8% |
The week looks fine at 26.8%, but Tuesday is at 32.7%: two more hours than Monday on a slower day. Cutting the overlap shift on Tuesday by 4 hours saves $80 and brings it to 29.1%. A weekly total hides this; per-day labour % against forecast shows it.
What range to aim for
There’s no single right number. A counter-service café with simple prep can run leaner than a full-service restaurant with a kitchen brigade. Set a target from your own last few good months (many owners start around 25% to 35% of sales for wages), then compare each day against it. Labour and food cost together, prime cost, is the better single number.
Prime cost
Prime cost % = (cost of goods sold + labour cost) ÷ net sales x 100
With food cost at 30% and labour at 27%, prime cost is 57%. Many independents aim for roughly 60% to 65% or below, because rent, utilities and everything else have to come out of the rest. Prime cost moves with both the schedule and the menu, so it’s the number to watch monthly. See food cost percentage.
Ways to bring labour % down without hurting service
- Schedule to the hour, not the day. Look at sales by hour; start the second barista when the rush starts, not at open.
- Stagger starts and ends instead of everyone 7 to 3.
- Avoid accidental overtime. In BC, hours over 8 a day and 40 a week cost 1.5x, and a close followed by an open can push hours into overtime. See BC overtime.
- Fold prep and stock counts into quiet hours as paid tasks rather than extra shifts.
- Raise sales per labour hour with menu and pricing, not just by cutting hours.
How Tasti Desk helps
Tasti Desk’s schedule puts forecast sales on top of each day (from your Square history) and shows labour cost and labour % of forecast per day while you place shifts, with overtime and stat pay included and the % coloured against your target. Yesterday’s labour % is in the morning note, and Reports and All locations show labour % and prime cost for any period. Desk uses scheduled wages, before employer costs, so treat it as the planning number; payroll has the final one.
Related features: Staff scheduling, Multiple locations, Reports and export.