Calculating labour cost in hospitality (and lowering it)
Updated
Staff are often the biggest cost in hospitality, yet many owners only find out what a month really cost when payroll comes in. Here's how to calculate it upfront and steer.
From gross wage to real cost
On top of the hourly wage, Dutch employers pay:
- Holiday allowance: at least 8% of gross wages.
- Holiday hours: by law 4 times the weekly hours, per year.
- Employer contributions such as unemployment and disability insurance and the health insurance contribution.
- Pension, where required by your collective agreement or pension fund.
As a rule of thumb, an employee costs 25–35% more than their gross wage. Your payroll provider can give you the exact figure.
Labour cost as a percentage of revenue
The key number is your labour cost percentage: staff costs divided by revenue (excluding VAT). In hospitality it's often between 30 and 40%.
Example: €12,000 expected revenue in a week and a 32% target gives €3,840 for staff. At an average €22 per hour all-in, that's about 175 hours.
Five ways to lower labour cost
- Stagger start times so people arrive when the rush does.
- Send people home in phases on quiet nights, by agreement.
- Plan from data: last year's numbers and bookings.
- Avoid overtime by scheduling to contract hours.
- Reduce no-shows, which often lead to expensive last-minute cover.
Know your staff cost every month
Gedekt shows hours worked, breaks, labour cost and no-shows per employee in one overview, exportable to Excel, PDF or payroll. See what it looks like.
Frequently asked questions
What is a healthy labour cost percentage for a restaurant?
Often between 30 and 40% of revenue excluding VAT, depending on the concept and how much service is involved.
This guide is general information, not legal advice. Rules can change and your collective agreement may contain different terms.