The labor cost percentage is the percentage of income that goes to paying for the restaurant's labor. It is the second main expense of a restaurant business after the cost of food. To generate more profits, this percentage of labor cost must be low. How to calculate the labor cost percentage Calculate the labor cost percentage of your restaurant with this formula: the principal cost is the sum total of your labor costs and the cost of products sold (COG), including the cost of food and liquor.
It represents the restaurant's biggest expenses and affects all of its operations, including the way menu prices are set, the budget is created and the restaurant's goals are set. How to calculate the main cost Use this formula to calculate the preferential cost of your restaurant: %3D COG + Total labor cost The break-even point is one of the most important parameters for calculating the restaurant. It helps you determine the return on your sales in order to recover what you have invested. You can use this number to forecast how long it will take you to recover what you have invested in your restaurant business.
It's also a crucial number if you're looking for investors. How to calculate the breakeven point The percentage cost of a food is the difference between the cost of creating a specific item on the menu and the selling price of the food. This restaurant metric is important because you should have an idea of how much you're selling a particular item and if it's profitable for your restaurant business or not. How to calculate the percentage of the cost of food This is the formula for calculating the percentage of the cost of food: Gross profit is the money that your restaurant earns after deducting the cost of the products sold.
It tells you how much money you have left to pay for other expenses, such as rent, electricity, etc. Use this formula to calculate your restaurant's gross profit, gross profit, triple total revenue (COG). Most restaurants are looking for a preferential cost of 55 to 60% to maintain profitability. If your main cost is more than 60%, you'll have to cut your COG or labor.
A number lower than 55% could mean that your operation is understaffed or too expensive. The percentage of the cost of food determines the difference between the cost of making your products and the price your customers pay. Most successful restaurants have a percentage of the cost of food between 28 and 35 percent (opens in a new tab) and keeping food costs under control is an essential element of your restaurant's profitability. Number of guests served per server per hour %3D Total number of guests served Number of service hours worked.
Turnover is a problem for the hospitality industry in general; a recent report by the Bureau of Labor Statistics revealed that the sector's turnover rate in the restaurant sector is 74.9%. Percentage of food cost %3D of total sales of the cost of food. The percentage of the cost of food is the difference between the cost of creating a specific item on the menu and the selling price of the food. At the microeconomic level, forecasting helps a restaurant plan inventory orders and how many employees need to work each shift to prepare and sell food.
Changes in the supply and demand of various foods may cause you to put your sales forecast back on the drawing board. The restaurant's total food costs divided by its annual sales volume (expressed as a percentage) can demonstrate the restaurant's efficiency in buying, receiving and inventorying food. Restaurants must work efficiently in their internal operations with their guests and staff to achieve the desired objective of profitability, productivity, customer retention and improve products and services. Using food cost percentages in restaurants allows operators to understand how much each food costs, as well as to monitor overall spending.