5 Tips for Controlling Labor Cost in Your Restaurant

Labor costs can quickly spiral out of control, eating into your profits and leaving you stressed. In fact, labor typically accounts for 30–35% of your restaurant expenses, making it one of the most critical areas to manage effectively. But here’s the good news — you can take back control without sacrificing quality or service. With the right strategies, you’ll keep your team productive while protecting your bottom line. Here are five practical tips to help you start controlling restaurant labor cost today.

No. 1 Schedule restuarant labor based on sales forecasts

One of the biggest mistakes I see restaurant owners make is scheduling without a clear idea of sales. Overstaffing leads to wasted labor dollars, while understaffing hurts service, morale, and sales.

How to fix restaurant labor cost with sales:

Use historical sales data from your POS system to create accurate forecasts and schedule accordingly. Plan for peaks and valleys to ensure you’re staffed appropriately for expected business volume.

No. 2 Cross-train your staff to save on restaurant labor cost

If your employees are only trained for one position, you’re limiting flexibility and increasing inefficiency. Cross-training allows you to shift staff around as needed without compromising service.

How to implement a plan to cross-train your restaurant staff:

Train team members for multiple roles, such as hosting and bussing tables or prepping food and running orders. This flexibility keeps labor costs in check and ensures you can adapt quickly to slow periods or unexpected rushes.

No. 3 Monitor and adjust restaurant labor hours in real time

Labor costs are dynamic — they change throughout the day. If you’re not paying attention, you could be spending more than necessary.

How to stay on top of restaurant labor hours:

Use your POS system’s real-time reporting to track labor cost vs. sales throughout the day. If business slows down, send people home early instead of paying for unnecessary hours.

Pro tip: Set up an “early-out” sheet in your manager’s office. Let staff sign up to leave early if needed — this helps morale because employees won’t feel like they’re being unfairly singled out for lost hours.

No. 4 Use restaurant technology to your advantage

Manually tracking labor costs is time-consuming and prone to errors. The right tools can automate this process and help you make better, faster decisions.

What to do to maximize restaurant technology:

Invest in scheduling software that integrates with your POS system. This will:

• Optimize labor scheduling
• Provide real-time insights
• Help you make data-driven staffing decisions

No. 5 Create and monitor a restaurant labor budget

Without a labor budget, you’re flying blind. You need to know how much you can afford to spend while still meeting your profit goals.

How to get started with a restaurant labor budget:

Set a restaurant labor budget. If you don’t have one, you’re 100% using the wrong labor target most of the year. Hold your team accountable. Once you have the correct targets, track labor costs and adjust as needed.

Pro tip: Want to learn how to build a budget? Grab my book, Restaurant Prosperity Formula: What Successful Restaurateurs Do, on Amazon or your favorite bookstore. Inside, you’ll find a free budgeting tool with instructional videos to help you create and track your restaurant’s labor budget.

Controlling restaurant labor cost doesn’t have to be overwhelming. By using:

• Sales forecasts
• Cross-training
• Real-time monitoring
• Technology
• A solid budget

You can take charge of labor costs and make it one of the most efficient expenses on your P&L.

Be sure to visit my YouTube channel for more helpful restaurant management video tips.