Flintrun Lending Group in Champaign, Illinois works through the labor cost percentage by hand: which payroll figures to include, how to divide by sales, and how the number reads before a patio, a second location or a repair. All figures here are invented.
What Percentage Is Labor Cost: Inputs Champaign, IL Restaurant Owners Already Have
Every input comes from reports a restaurant already runs. Sales for the period come from the point-of-sale system, net of sales tax and before tips. Wages for the same period come from payroll: hourly kitchen and front-of-house pay, salaried managers if you choose to include them, and overtime. Employer payroll taxes and any benefits the restaurant pays belong in labor cost too.
- Net sales for the period, from the POS report.
- Gross wages for the same period, from the payroll register.
- Employer payroll taxes and benefits for the period.
- The same dates for every figure: a week, four weeks or a month.
The formula: labor cost percentage = (wages + employer taxes and benefits) / net sales x 100. Use the same dates for both sides; mixing a two-week payroll with a month of sales is an easy way to get a wrong answer.
Reading the What Percentage Is Labor Cost Result Before a Patio Build-Out in Champaign, IL
Illustration only, invented figures: a counter-service kitchen had $62,000 in net sales over four weeks, $17,400 in wages and $2,100 in employer taxes and benefits. Labor cost is $19,500, and $19,500 / $62,000 x 100 = 31.5% (our arithmetic).
A patio adds seats, but it also adds servers and bussers. In this invented case, if the patio adds $9,000 in four-week sales and $3,100 in labor, the new percentage is $22,600 / $71,000 x 100 = 31.8% (our arithmetic). If the percentage rises after a build-out, the new seats carry a higher labor share than the existing ones (here $3,100 / $9,000 = 34.4% against 31.5%, our arithmetic), before counting the build-out payment.
Restaurant loans explains how a patio build-out is usually funded.
Reading the What Percentage Is Labor Cost Result Before a Second Location in Champaign County, IL
A second location starts with labor running ahead of sales: staff are hired and trained before opening, and the first weeks are slower than the established location. The labor percentage at the new place will usually start higher and come down as sales build.
Comparing that curve with the first location's numbers helps size the opening payroll a working capital loan or a line would need to cover. A partner reading a second-location request may ask for both locations' labor and sales figures by month.
Reading the What Percentage Is Labor Cost Result Before Hood Repairs at a Champaign, IL Kitchen
When a hood or a walk-in fails, the kitchen may close or cut its menu while staff are still on the schedule. Sales fall and labor stays, so the labor percentage for that week jumps. That jump is the cost of the breakdown in payroll terms, on top of the repair bill.
Running the percentage for the repair week and a normal week side by side shows the gap. A line drawn for the repair, and paid down once sales return, is one way to keep payroll steady through it.
It also helps to note how many shifts were cut, if any, during the repair. If the schedule stayed full, the payroll for the slow days is the real cost of the outage; if shifts were trimmed, the percentage shows how much of the hit the kitchen absorbed on its own.
Three Invented Champaign, IL Kitchens Worked Through Line by Line
| Kitchen | Net sales | Wages | Taxes and benefits | Labor cost | Labor % |
|---|---|---|---|---|---|
| Counter-service kitchen | $62,000 | $17,400 | $2,100 | $19,500 | 31.5% |
| Table-service dining room | $118,000 | $38,900 | $4,300 | $43,200 | 36.6% |
| Coffee bar | $41,000 | $13,800 | $900 | $14,700 | 35.9% |
The table shows why there is no single right percentage. A table-service dining room carries more front-of-house staff; a coffee bar has fewer staff but smaller tickets. The useful comparison is a kitchen against its own past months, not against a rule of thumb.
Track the figure every four weeks. A percentage that drifts up for three periods in a row is worth a look before it becomes a cash problem, and before adding a new payment for equipment or a build-out.
Food service and drinking places in Champaign County, IL paid $199.6 million in annual payroll to 9,637 employees in 2023 (CBP), so payroll is a large cost across the county's kitchens. When labor is running ahead of sales, working capital loans explains how to size a payroll gap, and you can send a request or call (217) 334-8194.
By Flintrun Lending Group · Updated
