Restaurant labor cost percentage: how to calculate it
Labor share = total employer cost of staff ÷ net revenue. In the example used across these guides: €192,000 on €600,000, or 32%.
In brief
- Total employer cost includes social contributions, TFR (Italy's end-of-service severance pay) and extras, on top of salary.
- The owner's work counts as a cost, even without a payslip.
- The yearly average hides the services that lose money, so it should be read by time slot.
What goes into the cost?
- Gross wages, including additional monthly payments.
- Social contributions paid by the restaurant.
- TFR (Italy's end-of-service severance pay): annual wages ÷ 13.5 (Art. 2120 of the Civil Code).
- Extra staff, seasonal workers and outside contractors.
- The work of the owner and family members.
Labor share = total employer cost ÷ net revenue × 100
The employer cost is in the payroll summary prepared by the labor consultant (consulente del lavoro), under the line “costo azienda” (total employer cost).
Why read it by time slot?
| Service (week) | Revenue | Hours | Labor share |
|---|---|---|---|
| Lunch, Mon–Fri | €3,000 | 50 | 36.7% |
| Dinner, Mon–Thu | €3,200 | 48 | 33.0% |
| Dinner, Fri–Sat | €3,900 | 44 | 24.8% |
| Sunday | €1,440 | 26 | 39.7% |
| Total | €11,540 | 168 | 32.0% |
ACRA example calculation: €22 of total employer cost per hour worked.
Weekend dinners carry the weekday lunches and Sundays. The levers are more revenue in the weak services, or shifts built around actual covers.
Labor and food cost together
In the example, together they come to 62% of revenue: 30% raw materials and 32% labor. More in-house preparation lowers food cost and raises hours, so the two are always read together.
Industry data
In 2025, employee jobs in the restaurant sector fell by more than 114,000, or −10.3% (FIPE, the Italy's restaurant trade association). For 2026, Confimprese (Italy's association of retail and restaurant chains) estimates about 10,000 unfilled positions in retail, waiters included (Confimprese).
Frequently asked questions
How much does labor cost weigh in a restaurant?
Total employer cost of staff ÷ net revenue. In this guide's example, 32%.
Does the owner's work count as labor cost?
Yes, if the owner works in the restaurant. The work is valued at what it would cost to have someone else do the same job.
How is the hourly cost of an employee calculated?
Total annual employer cost ÷ hours worked in the year, net of vacation, leave and sick days.
Sources
- Businesses, consumption, prices and employee jobs in the restaurant sector, 2025: FIPE-Confcommercio, Rapporto Ristorazione 2026 (Restaurant Report), summary of April 9, 2026 (in Italian).
- Shortage of professional profiles in 2026: Confimprese, press release of April 2026 (in Italian).
- Annual TFR accrual: Art. 2120 of the Civil Code, text of Law no. 297 of May 29, 1982 (in Italian).
- The calculation examples are elaborations by AC Retail Advisory on hypothetical values, consistent with the example income statement in the guide on food cost.
Updated October 9, 2026.
Author
Andrea Calistri, founder of AC Retail Advisory. I have 20 years of experience in food retail and the food industry and have opened more than 200 locations. I have run operations for restaurant networks, served as CEO in Italy, France and the Netherlands, and advised restaurant chains and food companies as a consultant.
Restaurant check-up
Where the restaurant loses margin, in euros.
For a complete read of the restaurant's numbers: restaurant check-up.
