Tracking Labor Cost in Your Restaurant Operation
- Amiya
- 2 days ago
- 3 min read
Labor is one of the biggest expenses in any restaurant - often second only to food. The good news? It's also one of the easiest costs to control once you start tracking it the right way. Tools like Cactus make it simple by showing your labor costs accurately and in real time. Here's everything you need to know, in plain English.
What is labor cost in a restaurant?
Labor cost is the total amount you spend on your people. It includes hourly wages, salaries, overtime, payroll taxes, and benefits. If someone is on your payroll, their pay is part of your labor cost.
What is labor cost percentage?
Labor cost percentage tells you how much of your sales goes toward paying staff. The formula is simple:
Labor Cost Percentage = (Total Labor Cost ÷ Total Sales) × 100
So if you spent $4,000 on labor in a week and made $14,000 in sales, your labor cost percentage is about 28.5%. Instead of running this math by hand, Cactus calculates it for you automatically as sales and hours come in.
What is a good labor cost percentage?
Most restaurants aim for 25% to 35%. Quick-service spots usually run lower, while full-service and fine dining tend to run higher because they need more staff. The "right" number depends on your concept - the key is knowing yours and watching it over time.
What is SPLH (Sales Per Labor Hour)?
SPLH shows how much revenue each hour of staff time generates:
SPLH = Total Sales ÷ Total Labor Hours
If you made $14,000 in sales and your team worked 320 hours, your SPLH is about $44. A higher SPLH means your team is working efficiently. It's a great way to spot overstaffed shifts and understaffed rushes - and Cactus tracks it shift by shift so you can see exactly where your money is going.
How often should I track labor cost?
Check it daily and weekly. Daily numbers help you adjust schedules quickly, and weekly trends reveal the bigger picture. Comparing labor to sales in real time keeps small problems from turning into expensive ones - which is exactly what Cactus is built to do, updating your numbers throughout the day.
How can I lower labor cost without hurting service?
Schedule based on your busiest and slowest hours, not habit.
Cross-train staff so fewer people can cover more roles.
Watch overtime - it adds up fast.
Use sales forecasts to plan shifts ahead of time.
What's the easiest way to track all of this?
A simple dashboard that shows labor cost percentage and SPLH side by side makes tracking effortless. Instead of digging through spreadsheets, you see exactly where you stand at a glance - and can make smarter staffing decisions every single day. Cactus brings all of these numbers into one clear, accurate dashboard, so you spend less time crunching data and more time running your restaurant.
Bottom line: Track your labor cost percentage and SPLH regularly, and you'll protect your profits without sacrificing great service.
See Cactus in action for your restaurant!
Learn more by booking a demo or see our pricing to get started!
DISCLAIMER: This information is provided for general informational purposes only, and publication does not constitute an endorsement. Cactus does not warrant the accuracy or completeness of any information, text, graphics, links, or other items contained within this content. Cactus does not guarantee you will achieve any specific results if you follow any advice herein. It may be advisable for you to consult with a professional such as a lawyer, accountant, or business advisor for advice specific to your situation.
