Q&A: Restaurant & Bar Labor Cost Percentagesby PBS Inc - RL Adams on 10/01/15
Question: Do you have an idea as to what that ideal labor cost percentage is for restaurants and bars?
Answer: Certain fast food restaurants can achieve labor cost as low as 25 percent, while table service restaurants are more likely to see labor in the 30 percent to 35 percent range. Food costs (including beverages) for the restaurant industry run typically from the 25 percent to 38 percent range, depending upon the style of restaurant and the mix of sales.
These are general and average percentages. But they are consistent amongst my restaurant and bar clients, most of which are around 35%, table service.
Question: How does the owners salary factor in? Is it normally just added to gross wages?
Answer: Yes....because, particularly in an S-Corp, ultimately the bottom line is what you're paying attention to. Shareholder distributions are based on the actual profit which means that salaries need to be part of the overall budget.