What counts as labour cost
Labour cost is more than hourly wages. A true labour cost includes salaried management, hourly staff, overtime, employer statutory contributions (EPF, SOCSO, EIS in Malaysia), benefits, bonuses and casual/agency staff.
Labour Cost % = Total Labour Cost ÷ Sales × 100
Schedule to demand, not habit
The single biggest labour saving comes from matching the roster to forecasted covers. Most restaurants schedule from memory — the same shifts every week — which over-staffs quiet periods and under-staffs peaks.
- Forecast covers or sales by day-part using historical data.
- Convert the forecast into required labour hours per station.
- Build the roster to those hours, staggering start/finish times.
- Compare actual labour cost per hour to sales per hour after the shift.
Track sales per labour hour (SPLH). It tells you productivity in real terms and exposes shifts that are over-staffed for the volume.
Overtime: the silent margin killer
Overtime is usually paid at 1.5× and often signals a scheduling failure rather than genuine demand. A few uncontrolled overtime hours per week across a team can quietly add 2–4 points to labour cost.