I asked a Perth owner what his labour was.
"Thirty-four percent. We're tight but we're fine."
Saturday dinner was 27%. Monday lunch was 61%. The 34% was an average that hid a room losing money before the first steak hit the pass.
If you searched restaurant labour cost percentage because your accountant said you were "a bit high," start by splitting the week. The percentage is not the problem. The blend is.
Healthy labour cost percentages (Australia)
Working bands I use:
- Cafe: 30-38%
- Restaurant: 28-35%
- High-service: 35-42%
Below 25% is often understaffing, not excellence. Above 40% is usually roster versus trade, not "the award went up." This is not a Fair Work determination. It is an operations read.
Prime cost is food plus labour. Under 65% of revenue leaves room for rent and a wage for you. Above 70% is a crisis, even if Saturday looks busy on Instagram.
Why the weekly percentage lies
A weekly labour % mixes the session that prints money with the session that should not exist. You can hit target for the week and still be three down on a $14,000 Friday and two over on a $2,800 Saturday lunch.
Owners then cut the wrong night because they stared at the week.
How to check labour cost properly
- Export four weeks of POS by day and session.
- Overlay hours rostered, including prep and close.
- Calculate labour % per session, not only per week.
- Circle every session that cannot cover labour after food cost.
On a $40,000 week, 32% labour is $12,800. Twelve wasted hours on a dead lunch, five days a week, is roughly $1,700. That is four points of labour before service.
Unrostered close time is the other leak. Sixty minutes after the rostered end, five nights, is almost a shift you never put in the percentage.
Roster against trade, not against last year
"How many people do I feel like I need" is not a labour model. Last year's Friday is not this year's Friday. Build the grid from the last four weeks of revenue, then name the holes.
Roster redesign exists as a standalone. Most rooms need the hours moved before they need more staff.
FAQ
What is a good labour cost percentage for a restaurant in Australia?
28-35% for a typical restaurant, if the hours follow the money. Cafe 30-38%. Look at sessions, not only the week.
Does the hospitality award explain a high labour %?
Sometimes rates are high. More often the hours are on the wrong session. Split the week before you blame the award.
Should I include the owner's drawings in labour?
If you work the pass, yes, or you will think the room is cheaper than it is. Be consistent week to week.
Appointments if you want one ugly week of POS against the roster.
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