How to use this calculator
Labor cost percentage is the wages you paid for a period divided by the sales in that period. Owners watch it because it is the one big cost that moves every day with how you schedule. A slow Tuesday with a full crew and a packed Friday with the same crew have very different numbers.
Type the day's sales and hours open, then add each shift: how many people, how many hours each, and the hourly wage. The calculator adds the wages, applies your employer burden (payroll taxes, workers' comp, benefits), and shows labor cost as a share of sales and as a cost per hour you were open. Try a shift with one fewer person or an hour shorter and watch the percentage move before you post the schedule.
A worked example
Sales of $3,600 over 12 hours. Shifts: 2 bartenders for 8 hours at $14, 1 barback for 6 hours at $12, 1 door for 5 hours at $15. Wages come to $371. With a 12 percent burden the total labor cost is $415.52, which is 11.5 percent of sales and $34.63 per hour open. Add a second barback for the same 6 hours and the labor cost rises to 13.8 percent.
The two common tip pools
By hours. Every hour counts the same. A person who worked 8 of the crew's 40 hours gets a fifth of the pool. Simple and easy to explain.
By points. Each role gets points per hour, for example bartender 1.0, server 1.0, barback 0.6, host 0.5. A person's share is their hours times their points, divided by everyone's hours times points. This rewards the roles that earn the tips while still paying support staff a fixed, predictable share.
Which roles may share a pool, whether managers may take part, and how credit card fees are handled are set by state and federal rules that change. This page only does the math; confirm your state's current rules before you adopt a pool.
Frequently asked questions
What is labor cost percentage?
Wages paid for a period divided by sales in the same period. $900 of wages on a $3,600 day is 25 percent.
What is a good labor cost percentage?
Commonly cited ranges are around 25 to 35 percent of sales for restaurants and bars and lower for retail, but it depends on your service model and rent. Use the number to compare days and shifts against each other.
Should payroll taxes be included?
For a true cost, yes. Put your employer burden as a percentage in the burden field; many owners use 10 to 20 percent.
How does a tip pool by hours work?
Each person's share is their hours divided by everyone's hours, times the pool.
How does a tip pool by points work?
Each role gets points per hour. A person's share is their hours times their points, divided by the total of everyone's hours times points.
Are tip pools legal everywhere?
Rules on who may share a pool differ by state and change over time. Check your state's current rules or ask a professional before you set one up.
Can this page carry a sponsor?
This page can carry one labelled sponsor; it never changes the maths.