What is Labor vs Sales?
Labor vs Sales is a performance measure in a restaurant. It calculates the amount of sales to the amount of money spent on labor costs. It can help the owner and manager of a restaurant understand how effectively they are spending their money on labor costs compared to how much money the restaurant is producing.
This measure is frequently used for-- Labor cost management
- Measuring operational efficiency
- Resource level adjustment
- Profitability improvement
- Scheduling purposes
Labor vs Sales is probably one of the key performance indicators to be reviewed on the most frequent basis.
How is Labor vs Sales calculated?
Here is the calculation-
Labor Cost Percentage = Total Sales/ Total Labor Cost x 100
Example
- Total Sales= $20,000
- Total Labor Cost= $5,000
- Labor Cost Percentage = 25%
This implies that 25% of the restaurant's revenue from sales was utilized as labor expenses