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Example of Restaurant Business Plan Financials Part 9- Restaurant Labor Cost

Aside from the cost of food labor is typically the biggest single expense for your restaurant business. Without some experience in creating restaurant business plans it can be difficult to know exactly how much labor you’re going to need to serve the volume of food do you expect to sell.

This is where having an experienced restaurant adviser comes in handy as they can often help you figure out the hours and the number of staff you will need. Using the labor calculator in the spreadsheet Way of art he outlined all the possible positions although you can serve you have more positions or change the titles if you prefer. Your job is to determine how many hours each of these positions will work and how many of each position you will have and what your pay rate will be for them.

If this isn’t familiar to you then simply swing by a similarly sized similarly busy restaurant operated by your competition and take a look at how many people they have working both in the front and the back. Check this out there busy times and don’t forget to account for the fact that during the slower times there is still prep work and other things that need to be done so that the busy times can be handled successfully.

If anything you want to overestimate your as you can always scale back later if it proves to be more than you need.

The labor calculator will total up to positions and the hours and the wages plus any additional benefits you may be offering and calculate your total labor costs as a percentage of your sales it will then adjust this labor cost as your sales very from month to month and year to year so that your labor percentage stays consistent from year to year.

For the first year we expect that the labor will be a little bit higher than average and we build that into the spreadsheet as well to compensate for either an over-enthusiastic cutback of staff and the likelihood that in the beginning you will go through quite a few people before you find a solid crew of workers that you can depend on to help you run your business.

Keep in mind that turnover of staff costs more because during the training period you have extra people on to actually do the work while the trainees watch and learn but don’t add much to the process.

The ideal labor costs for a restaurant depends on the type of restaurant that it is in a particular way you operate it. Having higher ratio of staff to customers is obviously going to cost more and having a fast food type establishment with lower menu prices will also mean the percentage of labor costs will be higher relative to sales that if your food costs more. Again this is where having an adviser can be extremely helpful in making sure that your numbers are realistic and accurate for starting a restaurant of the kind you’re planning.

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