Improving your labour cost percentage for higher profit

Discover how improving your labour cost percentage through sharp data analysis and strategies for a higher average check can improve your restaurant's profitability and your handling of variable guest flow.

The challenge of the labour cost percentage

In the restaurant industry, managing labour costs is a constant balancing act. The labour cost percentage — the ratio of labour costs to total revenue — is a decisive KPI for restaurant managers. Holding to a target of 35% means that if your restaurant's monthly revenue is 1,000,000 kr, your labour costs should not exceed 350,000 kr.

The variable challenge: guest flow

One of the biggest challenges in managing the labour cost percentage is unpredictable guest flow. Restaurant scheduling, often based on the number of sections in the dining room and the size of the menu, makes it hard to reach the labour cost percentage you want on quieter days. Relying on a standard rota without adjusting for actual guest flow can lead to unnecessary labour costs during slower periods.

A strategic approach: raise the average check

An effective way to handle these challenges is a strategic look at the average check — the average of what each guest spends. By encouraging guest spending to raise the average check, for example through upselling starters, desserts, aperitifs and speciality coffee, you can balance the labour cost percentage more effectively even when guest numbers are lower.

Guestrix: your partner for sharp data analysis

With Guestrix you get access to tools that:

• Track upsell items: get a clear overview of which upsell items contribute most to your total revenue.
• Analyse guest behaviour: understand what share of your guests order starters, desserts, or open the meal with a drink.
• Identify room for improvement: use data from Guestrix to make informed decisions about where in your menu the greatest potential for upselling sits.

In closing

Navigating the challenges of the restaurant industry takes more than a thorough understanding of food and service. It also takes sharp use of data and strategic decisions grounded in that data. With Guestrix as your partner, you can not only manage your labour cost percentage effectively but also build a more profitable and sustainable business.