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How to Calculate Restaurant Labor Costs: Key Metrics for Owners and Operators

Your restaurant labor cost and labor percentage are two of the most essential business metrics to track, especially as minimum wages rise around the country. Labor is one of the biggest expenses for a restaurant. With the many moving pieces in a restaurant, labor costs are also always changing, requiring daily, weekly, and quarterly tracking and reporting.

The methods for controlling restaurant labor costs vary by the type of restaurant. A quick service restaurant versus a full-service fine dining restaurant have different labor cost standards and require different approaches. As minimum wages rise around the country, location and locale also impact your restaurant labor cost. Knowing how to calculate labor cost percentage allows you to monitor this large expense and streamline your labor operations.

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