How to Calculate the Payroll-to-Total-Sales Ratio and Other Ratios
- Total all payroll costs for each shift.
- Divide the total by each shift’s gross sales.
- Multiply the result by 100 to convert the number into a percentage
Payroll-to-Total-Sales Ratio = ((Payroll/Sales) x 100)
There are other metrics available that some believe provide an even more accurate measurement of payroll costs. Here are three of the most popular:
The number of covers per labor hour (Total Labor Hours/Customer Count)
The total cost of labor per cover (Total Payroll Costs/Customer Count)
The total cost of labor per labor hour (Total Payroll Costs/Total Labor Hours)
All of these metrics provide a way to measure labor costs, but they don’t provide a solution for controlling labor costs. When used in conjunction with one another, and considering your restaurant’s particular situation, these measurements and ratios can be helpful in pointing out problem areas within your business. These measurements alone should not be used as a launching point for major structural changes.
How long does it take to make an employee schedule? It should take less than 5 minutes! Did you know that labor costs could be as much as 30% of your expenses? TimeForge can help streamline and minimize labor costs through effective employee scheduling at your restaurant, bar, or club.