Most UK pubs and restaurants spend between 32% and 38% of their net sales on labour. The best-run operations hold it between 28% and 32%, consistently. Where you should sit depends on your venue type and service style, but if you’re above 38%, there’s almost certainly money in your rota.
To calculate your labour cost percentage, divide your total labour cost by your net sales (excluding VAT) for the same period, then multiply by 100. A labour percentage of 35% means 35p of every pound you take goes on wages before anything else is paid.
Labour cost % = total labour cost ÷ net sales × 100
Worked example: one week
| Figure | |
|---|---|
| Total labour cost (wages plus employer costs) | £12,000 |
| Net sales (excluding VAT) | £34,000 |
| Labour cost % | £12,000 ÷ £34,000 × 100 = 35.3% |
Whatever you include in labour cost, such as employer National Insurance, pension contributions and salaried managers, include it every time. Consistency matters more than the exact definition, because it’s the trend you’re managing.
Across UK hospitality, a labour cost percentage of 32–38% is typical, and the strongest operations run at 28–32% consistently. Lower isn’t automatically better, though. The goal is a percentage that protects margin without leaving guests waiting at your busiest times.
| Benchmark | Labour cost % |
|---|---|
| UK national average | 32–38% |
| Best-run operations | 28–32% |
| 128 sites before S4labour’s Operational Excellence programme | 37.1% |
| The same sites six months after | 33.6% |
That 3.4-point drop happened without cutting pay. It came from scheduling the right hours in the right places.
Your ideal labour percentage depends on what you sell and how you serve it. Food takes more hands than a pint, table service takes more than counter service, and premium experiences need more people per guest. Compare yourself with similar venues, and with your own trend, rather than one national number.
If you run a mixed estate, set targets by venue type, not one figure for every site.
Labour cost percentage tells you whether you’re profitable. Sales per labour hour (SPLH) tells you whether your hours are in the right place. Because labour percentage rises with every pay increase, SPLH is the better measure for judging the rota itself. Track both, side by side, every week.
Our guide to calculating SPLH explains how to work it out and what a good figure looks like.
The lever isn’t cutting pay; it’s scheduling. Across the 128 sites in our Playbook, 47.6% of scheduled hours were misaligned with demand before the programme. The sites that improved most could see their numbers this week, built rotas from a forecast and reviewed them weekly.
For more on spotting wasted hours, see our guide to the 5 signs your pub or restaurant is overstaffed.
Yes. Rising wages push labour percentage up, but scheduling is the part you control. Across the 128 sites in our Playbook, average hourly labour costs rose during the programme, yet the labour ratio still fell by 3.4 percentage points, because hours were placed where trade needed them.
Wages went up. The ratio still fell. That’s the measure of what good scheduling is worth, and it’s why labour efficiency is no longer a nice-to-have.
Labour cost percentage is your total labour cost as a share of net sales. It shows how much of every pound you take goes on wages, and it’s one of the clearest measures of profitability in hospitality.
Include wages and employer costs such as National Insurance and pension contributions, plus salaried managers. Whatever you include, keep it the same every week so you can track the trend.
No. Cutting too far leaves peaks understaffed, which hurts service and sales. Aim for a percentage that protects margin while keeping your busiest hours properly covered.
Weekly, by site. Monthly reviews come too late to change decisions; a weekly check on the same day keeps rotas in line with trade.
The benchmarks and results in this guide come from The Labour Efficiency Playbook: five brands, 128 sites and twelve months of data, plus eleven practical things you can do this week. Download the Playbook, find out more about labour optimisation, or book a demo to see your own numbers.