Three Most Important Things You Need to Know About Your Restaurant Labor Cost

[@Therestaurantboss]

What is your target labor cost?

[@KazMaw1]

I don't know 😅

[@Therestaurantboss]

You might want to figure that out.

[@kwrer6087]

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[@jasminerabon6649]

Thanks for your value !

[@Therestaurantboss]

You're so welcome! -Dawn, Team TRB

[@tinymint981]

Thanks for the videos

[@Therestaurantboss]

Glad you like them!

[@bryanarri3422]

Thanks for the content! I really appreciate you making this happen so we all do better!

[@Therestaurantboss]

Thanks, man! It's my pleasure - glad the content is helpful!

[@Sigfried83]

Thank you bud

[@kyonguyen89]

subscribed! Thanks for all the contents, we are about 2 months away from our grand opening, your video has been very helpful!

[@Therestaurantboss]

So happy to read this! Good luck with the opening and let us know how it goes!

[@KazMaw1]

Same here. Good luck!

[@tinymint981]

Subscribed !!

[@Therestaurantboss]

Love that! Thanks so much! Did you also grab our free Toolkit? www.therestaurantboss.com/toolkit

[@noelbanez4946]

what a very interesting...thanks

[@corneliofernandes4903]

Great Know How of Labor Cost ...many thanks.

[@benrabahmohamed9657]

Awesome video good job

[@Therestaurantboss]

Thanks!

[@browneyes7722]

Good day Sir. I have a quick question, though not related to labor and prime cost in general. do you have any advice how does a local, smaller restaurant compete with a giant chain like Mcdonalds, or any other more established local restaurant in the same are/ locale?

[@Therestaurantboss]

It sounds simple, but you need to give them a reason to show up. Now more than ever, people are more diligent about where they spend their money. If they go out to a restaurant they want it to be something they can't get at home and something that is a fun experience. McDonald's is decent, fast and relatively inexpensive but you can wow your customers in other ways. Dawn - Team TRB

[@ryanlkimmel]

Onboard. Great video!

[@Therestaurantboss]

Thanks, man!

[@bryanarri3422]

3:23 - do you mean labor percentage should go down?

[@Therestaurantboss]

Yes I said Cost of Goods Sold, it should say labor. Thank you for catching that. I will see if my team can insert a quick edit.

[@kalchaazahbanyahawadah6927]

Thank you for catching 👌🏾

[@BirendraRawat01]

Good day Ryan, I run my own restaurant. I am still quite confused about setting the prices for Menu items after considering all the costs and the profit margin on it. It's easy to get food cost but trouble is how to add up the other costs to it like, utility costs, labour costs, GsT, council fees, rental of property, rates, bank charges and all other baisc expenses related to a restaurant. Looking forward to hearing from you, cheers.

[@KazMaw1]

Hi, I think personally what is a good calculation is dividing it per the time it takes for the order like time to order, prepare and eat... Hope this helps.

[@Therestaurantboss]

You don't add any of those expenses, they are not part of Food Cost, that is why it is called Food cost or cost of goods sold. It is ONLY food, or liquor or beer cost of the goods you are going to sell. Labor is another calculation, then the two together are prime cost. Please see these other videos where I explain this all in more detail: therestaurantboss.com/six-things-restaurant-food-cost/, therestaurantboss.com/important-things-restaurant-labor-cost/, therestaurantboss.com/what-is-restaurant-prime-cost/

[@feleciagrubbs6145]

I'm a GM at a Mcdonalds and I'm new to my position. My sales have been up but labor is killing me. What can I do to lower my labor

[@tanbaongosmaokl]

For instance, you may make $2,000 on Tuesday, but $8,000 on Friday. However, you have six people working on both of those days. This means some staff are not really needed on Tuesday to net the same sales. To get your labor cost to 25 percent on Tuesday, you can only spend $500 on labor since sales are $2,000. If your hourly wage is $15, you can only schedule 33 hours of labor. This simple equation based on daily sales will help you get that 25 percent of labor cost you need to be profitable.

[@SiemReap2012]

What is the ideal labor cost Ryan?

[@Therestaurantboss]

It depends. I know that's not the answer that you want to hear but every restaurant is different. What matters is that your Prime Cost is under 60%. It doesn't matter if your labor cost is 30% or 40% as long as your Prime Cost doesn't go above 60%. Prime Cost is Total Cost of Goods Sold + Total Labor / Total Sales. Here's a great follow up video on prime cost: therestaurantboss.com/what-is-restaurant-prime-cost/

[@lesliepresby9168]

What about tips? Do you back the tips out of the totals?

[@Therestaurantboss]

You should, yes. That's not part of your cost for labor. -Dawn, Team TRB

[@kevinagg61]

My gm is clocked in 6 hours a day for 6 days a week, but he only shows up for 2 hours a week, then gets mad when labor is high :)

[@Therestaurantboss]

Well you are allowing that so you can't really blame them.

[@kevinagg61]

@@Therestaurantboss sorry, im a lead , not an owner lol

[@Therestaurantboss]

@@kevinagg61 Then why is it your concern? I hate to say that, but it doesn't sound like your issue?

[@heshamkamal5601]

I need translation to Arabic 😢

[@Therestaurantboss]

Sorry - wish I could help there.

[@corneliofernandes4903]

Great Know How of Labor Cost ...many thanks.