Restaurant Labour Cost Percentage in the UK: 2026/27 Rates and True Hourly Cost

Labour cost percentage is your total labour cost divided by your net sales (excluding VAT), multiplied by 100. In UK restaurants it is commonly quoted at about 30 to 35% of sales, and prime cost (food plus labour) at 55 to 65%. The trap is counting only gross wages. The true cost of an hour includes employer National Insurance, employer pension contributions and holiday pay, which add roughly a quarter to the headline rate for many hourly staff, as the worked example below shows.

The formula and what to include

Labour cost % = total labour cost ÷ net sales × 100.

Total labour cost should include:

• Gross wages and salaries for kitchen, front of house and management.
• Overtime and paid breaks.
• Employer National Insurance contributions (NIC).
• Employer pension contributions under auto-enrolment.
• Holiday pay and statutory sick pay.
• Agency staff invoices, if you use them.

Be consistent with service charge and tips. Customer tips paid on to staff are not your cost. If a compulsory service charge sits in your sales figure, the part paid out to staff belongs in labour cost. See our tronc and Tips Act guide for the rules.

Prime cost is labour cost plus cost of goods sold, as a percentage of net sales. Lightspeed's UK guide gives a 55 to 65% target and treats 70% as a warning. Those ratios are rules of thumb, with no underlying data published. See restaurant profit margins for where labour sits in the whole P&L.

The 2026/27 rates that drive the number

All of these were checked on gov.uk in October 2026.

Some notes on how these work:

• Age bands. The higher National Living Wage applies from age 21. A team with many 18 to 20 year olds has a lower wage floor than one made up of over-21s.
• Employer NIC is charged on each employee's pay above £5,000 a year. For a part-time worker earning less than that, there is none.
• Employment Allowance reduces the employer NIC bill for the whole business. Since April 2025, the £100,000 Class 1 NIC liability cap no longer rules employers out, so larger employers can claim it too. A company with only one director cannot claim if that director is the only employee liable for secondary Class 1 NIC.
• Pension. The employer minimum is 3% of qualifying earnings, which for most automatic enrolment schemes are earnings between £6,240 and £50,270 a year. Your scheme rules may be more generous.
• Holiday. Statutory leave is 5.6 weeks a year. For workers on irregular hours and part-year workers in leave years starting on or after 1 April 2024, holiday accrues at 12.07% of the hours worked in each pay period.

True hourly cost: a worked example

Take a team member on the National Living Wage who works 100 hours in a month, and cost the month:

That £16.03 is about 26% above the £12.71 headline rate. The £417 and £520 figures are the monthly equivalents of the £5,000 NIC threshold and the £6,240 lower pension limit. If you price your rota on £12.71 an hour, your labour cost is understated by a quarter.

The Employment Allowance then comes off your total bill as a block. As an illustration, a £210,000 payroll spread across 20 people who each earn above £5,000 a year would owe 15% × (£210,000 − £100,000) = £16,500 in employer NIC before the allowance and £6,000 after it. Your payroll provider or accountant can confirm your actual figure.

Measure productivity, not just percentage

Labour percentage on its own can hide a problem, or even encourage wrong decisions. Two simple productivity measures give a clearer picture.

• Sales per labour hour (SPLH) = net sales ÷ labour hours worked.
• Covers per labour hour = covers ÷ labour hours worked.

Illustrative example for a Saturday with net sales of £6,400 and 96 labour hours: SPLH is £66.67. With an average fully loaded cost of £17.50 an hour, labour cost is £1,680, or 26.3% of sales. A quiet Tuesday with £1,900 of sales and 52 hours has an SPLH of £36.54 and a labour cost of £910, which is 47.9%. Some of that Tuesday cost is unavoidable minimum cover, so judge labour by week, not by day, and look at SPLH by day-part.

Scheduling levers that cut labour cost

1. Schedule to forecast, not habit. Use bookings, last year's sales and the weather to forecast covers, and build the rota from that.
2. Stagger starts and finishes. Bring people in as the first booking arrives and send them home as the room clears.
3. Cross-train. A server who can run the pass or a kitchen porter who can prep covers a gap without an extra head.
4. Set a minimum floor and a plan for quiet shifts. Decide in advance the lowest viable staffing for a slow service.
5. Watch overtime and breaks. Overtime premiums and unplanned extra hours add up. Make sure rotas respect rest and working time rules; the rota template guide covers the basics.
6. Track actual against planned. Compare rota hours with clocked hours weekly.
7. Account for upcoming rule changes. The Employment Rights Act 2025 is phasing in changes that affect how you schedule and pay staff. See our hospitality guide for the timeline.

TablePort's staff scheduling (£49 per location per month ex VAT) includes clock-in and out, wage forecasting and overtime warnings, with UK working time presets, so you can see forecast labour cost against forecast sales before the week begins. A spreadsheet works for a single small site if someone updates it every week.