Labor Cost Percentage Word Problems: Restaurant Labor Math Step by Step
Labor cost % = labor cost ÷ sales × 100. Labor cost includes hourly wages, salaries, overtime, payroll taxes and benefits for the same period as the sales. Most restaurants run between 25% and 35%; add the food cost and you have prime cost, which most aim to keep near 60% of sales.
Labor cost problems appear in hospitality cost-control courses right after food cost percentage, and they use the same idea: a cost divided by the sales it produced. The problems below go from a single percentage to building a schedule that hits a target. Benchmarks are industry averages — Toast puts a typical restaurant at about 30% of sales, with fine dining higher and quick service lower — so a textbook problem's target is whatever the problem says.
The Formulas
Labor cost % = labor cost ÷ sales × 100
Labor cost = (hours × hourly wage) + salaries + taxes and benefits
Labor budget = projected sales × target %
Prime cost = cost of goods sold + labor cost
Sales per labor hour = sales ÷ labor hours
Level 1: The Percentage
A restaurant had $42,000 in sales last week and $12,180 in labor cost. What was the labor cost percentage?
$12,180 ÷ $42,000 = 0.29 = 29%.
Level 2: Building Labor Cost From Hours
Five cooks each work 32 hours at $18. Two dishwashers each work 25 hours at $16. The kitchen manager is paid a salary of $1,150 a week. Payroll taxes and benefits add 10% to all pay. Sales were $18,500. What is the labor cost percentage?
Cooks: 5 × 32 × $18 = $2,880. Dishwashers: 2 × 25 × $16 = $800. Manager: $1,150. Wages = $4,830.
With taxes and benefits: $4,830 × 1.10 = $5,313. Labor cost % = $5,313 ÷ $18,500 = 28.7%.
Leaving out the salary and the 10% would give $3,680 ÷ $18,500 = 19.9% — a number that looks great and is wrong. Labor cost means everything the staff costs, not only the hourly wages.
Level 3: A Labor Budget From a Target
Next week's sales are projected at $24,000 and the labor target is 30%. Salaried staff cost $1,800. The average hourly wage, including taxes, is $17.50. How many hourly labor hours can be scheduled?
Labor budget = $24,000 × 0.30 = $7,200. Left for hourly staff = $7,200 − $1,800 = $5,400.
Hours = $5,400 ÷ $17.50 = 308.57, so schedule 308 hours. Round hours down — rounding up puts you over budget.
Level 4: Overtime
A line cook earns $20 an hour and works 46 hours in one week. Overtime is paid at 1.5 times the hourly rate for hours over 40. What is the cook's pay, and how much did overtime add?
Regular: 40 × $20 = $800. Overtime: 6 × ($20 × 1.5) = 6 × $30 = $180. Pay = $980.
At the straight rate the same 46 hours would cost $920, so overtime added $60. Under the federal Fair Labor Standards Act, overtime is due after 40 hours in a workweek; some states also count daily overtime.
Level 5: Prime Cost
A month's sales were $30,000. Cost of goods sold was $9,300 and labor cost was $8,700. What is the prime cost and the prime cost percentage?
Prime cost = $9,300 + $8,700 = $18,000. Prime cost % = $18,000 ÷ $30,000 = 60%.
Split out: food cost 31%, labor 29%. Prime cost is the number most owners watch, because food and labor are the two costs a manager can change week to week.
Level 6: Sales Per Labor Hour
A restaurant schedules 450 labor hours a week at an average of $16 an hour. In a normal week sales are $22,500. In a slow week sales drop to $18,000 but the schedule does not change. Compare sales per labor hour and labor cost %. How many hours would bring the slow week back to 32%?
Labor cost = 450 × $16 = $7,200.
Normal week: $22,500 ÷ 450 = $50 per labor hour; $7,200 ÷ $22,500 = 32%.
Slow week: $18,000 ÷ 450 = $40 per labor hour; $7,200 ÷ $18,000 = 40%.
Budget at 32% = $18,000 × 0.32 = $5,760. Hours = $5,760 ÷ $16 = 360 hours, so 90 fewer hours. That is why schedules are built from sales forecasts, not copied from last week.
Quick Reference
| To find | Formula | Typical range |
|---|---|---|
| Labor cost % | Labor cost ÷ sales × 100 | 25–35% (quick service 20–25%, fine dining 35–45%) |
| Labor budget | Projected sales × target % | — |
| Hours allowed | (Budget − salaries) ÷ average wage | Round down |
| Overtime pay | Hours over 40 × wage × 1.5 | Federal rule; some states differ |
| Prime cost % | (COGS + labor) ÷ sales × 100 | About 60% or below |
| Sales per labor hour | Sales ÷ labor hours | Varies by concept |
Common Mistakes
- Counting only hourly wages. Salaries, payroll taxes and benefits are labor cost too.
- Mismatched periods. A week of labor divided by a month of sales gives a meaningless percentage.
- Rounding scheduled hours up. Round the hours you can afford down.
- Forgetting overtime when building a schedule. One cook at 46 hours costs more than two cooks splitting the same hours.
Printable Worksheet: 8 Labor Cost Percentage Problems With Answer Key
These 8 problems are new — none of them repeat the worked examples above, so they work as homework, a quiz or a warm-up. Print the worksheet and the answer key separately; the key shows the working for every answer, not just the final number.
Labor Cost Percentage Word Problems — Worksheet
Labor cost % = labor cost ÷ sales × 100. Overtime is 1.5 × the hourly rate after 40 hours. Round percentages to one decimal place. Show your working.
- Sales were $8,500 and labor cost was $2,550. What is the labor cost percentage?
- Projected sales are $60,000 and the labor target is 25%. What is the labor budget?
- A cook works 38 hours at $19 an hour. What is the cook's pay for the week?
- A prep cook earns $17 an hour and works 44 hours. Overtime is paid at 1.5 times after 40 hours. What is the week's pay?
- Labor cost was $11,400 on sales of $36,000. What is the labor cost percentage?
- Cost of goods sold was $10,800, labor was $9,900 and sales were $33,000. Find the prime cost and prime cost percentage.
- The labor budget is $6,000. Salaried staff cost $1,500. The average hourly wage is $18. How many hourly labor hours can be scheduled?
- A restaurant had $28,000 in sales and used 560 labor hours. What were the sales per labor hour?
CookingCalcs · cookingcalcs.com/blog/labor-cost-percentage-word-problems.html
Show answer key
Labor Cost Percentage Word Problems — Answer Key
- 30%. $2,550 ÷ $8,500 = 0.30 = 30%.
- $15,000. $60,000 × 0.25 = $15,000.
- $722. 38 × $19 = $722.
- $782. 40 × $17 = $680. 4 × $25.50 = $102. $680 + $102 = $782.
- 31.7%. $11,400 ÷ $36,000 = 0.3167 = 31.7%.
- $20,700; 62.7%. $10,800 + $9,900 = $20,700. $20,700 ÷ $33,000 = 62.7%.
- 250 hours. $6,000 − $1,500 = $4,500. $4,500 ÷ $18 = 250 hours.
- $50 per labor hour. $28,000 ÷ 560 = $50.
CookingCalcs · cookingcalcs.com/blog/labor-cost-percentage-word-problems.html
More Practice
To turn food and labor cost into a menu price — including the prime cost pricing method — see menu pricing word problems.
Labor cost is the second half of prime cost; the first half is in food cost percentage word problems, and the plate-level costing behind it is in cost per serving word problems. For the guest's side of the check — tax, tips and splitting — see restaurant math word problems. The complete culinary math guide collects every type.
Frequently Asked Questions
What is a good labor cost percentage for a restaurant?
Most restaurants run between 25% and 35% of sales, with about 30% a common benchmark. Quick service tends to be lower (about 20–25%) and fine dining higher (about 35–45%).
Does labor cost include payroll taxes and benefits?
Yes. Labor cost covers hourly wages, salaries, overtime, employer payroll taxes and benefits for the period. Using hourly wages alone makes the percentage look lower than it is.
What is prime cost?
Prime cost is cost of goods sold plus total labor cost. With $9,300 of food cost and $8,700 of labor on $30,000 of sales, prime cost is $18,000, or 60% of sales.
How do you work out how many hours you can schedule?
Multiply projected sales by the labor target to get the budget, subtract salaried pay, then divide by the average hourly wage including taxes. Round the result down.