# Kitchen Labor Cost



## joshua tomczyk

The chef/owner at my work wants to give me a bonus based on kitchen labor cost. He wants it to be at 14% I know that labor cost varies between kitchens but that seems very very low. I was wondering what some of you ran for labor cost %. 
If you were to ask me the kitchen is already run a man down leaving me many production tasks and almost no time to actually run the kitchen. I can work to get more out of my employees though I am not sure how, and reducing labor sounds like I would have to spend more time at work which I will not do. 55hrs a week is enough, I have a wife and kids and they are too important to me.
Any input would be greatly appreciated.


----------



## peachcreek

To me, labor cost is about a lot of things. How busy you are. It all gets down to making sure the employees that are working at a high production capacity or more. Or maybe the sales per customer aren't high enough. Maybe there are too many labor intensive menu items. And it doesn't hurt to lean on you a little, too. I get in more um, "discussions" about labor cost more than anything else with my partner even after all these years so don't feel too bad.


----------



## chef1x

Yikes!14%???
Wow.
Like Peachcreek, I agree that labor cost is about a lot of things, and that includes what kind of operation and circumstances you are working in. Is it fast food, fine dining, hotel?? Having been in and around Tucson, AZ and having worked at a very popular and successful multi-unit operation there (many years ago, and I have kept my ear on the heartbeat of Phoenix), I would say 14% is completely LOCO:crazy: and personally, I rarely like to get into those kind of performance bonuses unless MAYBE you are in a big corporate environment. I also tend to agree, and I'm sure many here would DISAGREE, that 55 hours is enough and why saddle yourself with a near suicidal situation that requires probably more hours with only a small chance of more pay. There's got to be more incentive than that....Having said that, I do also agree with Peach in that it's pretty common to be "leaned" on; we all want to be better, stronger, faster, more efficient, etc. and we all need motivation and a little push....

BUT, I have never personally experienced 14% labor cost nor have known any with such a number, realistically speaking.

I'm sure there's lots of people out there with more experience than I in this matter, so let's hear it folks!!!

In any case, good luck to you and keep us posted on how this all plays out.


----------



## kuan

14% is wicked low, but a lot depends on how you calculate it. Is this before your sales tax? Do you count your salary? The average exec. chef takes costs between 4-6% of total sales.

14% is not low if you're a steakhouse. It's even easier to achieve if it's a high end steakhouse. It's achievable if most of your volume is banquets, but I've never seen anything below 17% in regular full service family style restaurants. But like I said, it all depends on how it's calculated.

Kuan


----------



## joshua tomczyk

Thanks for the input everyone. 
Here is our web sight http://www.fuegorestaurant.com/
We are a fine dining restaurant with a huge menu and if we have the product we will make anything. 
The percentage is based off all kitchen employees including me and my Sous (salary) and based off sales before sales tax. The sick thing is when we are busy we will run 9% and lower. 
Oh on that 4-6% for exec chef I wish. We do over $4 mill a year and I make $29,500 slightly over 1/2 of one percent. Of course I am only Chef de Cuisine.


----------



## chef1x

Joshua, how long have you been there? How long cooking?
Do you get any benefits and/or other bonuses?
Sounds like you're working for a very accomplished chef and you may working for the opportunity to do so? Depending on all these factors it doesn't sound like a big deal for you to reach 14% if you often perform under 9% (wow!); on the other hand, your salary seems a bit low. I'm sure you've checked what other chefs make for salary in the area?


----------



## kuan

4 mil is huge, bigger than many 200 room hotels. From experience, the average restaurant does between 500k on the low end to 1.5 mil. 4 mil is a lot of revenue, especially since many fine dining restaurants do 60 covers a night if they're lucky. Even Victoria and Albert's maxes out at 100 a night.

The problem with bonuses based on labor or food costs is that the restaurant can still lose money. In fact, a lot of restaurants which meet their labor goals still lose money. If you cannot manage your other variables you're SOL. Most companies which are truly concerned with profitability offer bonuses based primarily on profits. These are parsed out based on the performance of individual departments. For example, if the restaurant makes a profit of 100,000 and your department met all your goals and exceeded them, your department might be rated 1.1. The FOH may have lagged behind a little this year and achieved a rating of only .95. The restaurant can then use these ratings to distribute bonuses.

But managing labor using percentages is old school. These days many more people use covers vs. labor hours. You project the number of covers you're going to do and then schedule accordingly. This method is generally more stable and eliminates the need to nip and cut labor minutes on the fly. It also comes very close to matching your labor goal in terms of percentages. I would try this method and see if it works for you.

Kuan


----------



## panini

The sales tax thing is funky. Proper accounting would not include sales tax in any calculation. The business is collecting funds for local Gov't and should be completely seperate. I even have a seperate account for it.
I've always been opposed to bonus driven anything. If it is not absolutely done right where the calculators are unknown to the recipient, just compensation for a job well done,the customer or guest will suffer. If you put the recipiebt in controll of variables the descisions that person makes are usually based on greed. This type of business will usually result in mediocrity. ie, already happened in the purchasing aspect.
just my opinion


----------



## chef1x

I agree, the motivation becomes solely greed oriented, probably at the expense of coworkers, customers, the operation and ultimately your own position.

The method Kuan relates of determining how much labor you need is the way to go and bonus or no, over the long term it will make you a more adept Chef de Cuisine, and a more marketable candidate for advancement.


----------



## chefboy2160

Hey Josh . Youve gotten some good advice here . Your wage is not great but its not good , just enough to keep you hanging in there , especially with a family . I have noticed through my career that in order for me to make more money and better hours I have had to change jobs many times . I also changed my food venues from coffee shops , fine dinning , hotels and then finally healthcare . Yeah its a different path but now Im the food service manager responsible for my department ( dietary ) . I have a chef of my own training that works for me and as I train the kitchen staff , well things pretty much go my way . I produce better hospital food than any place Ive seen and the big wigs brag on having a real chef as there manager . My cost is laid out annually
and I get a raise every year .I now make 40 + salary and work normally mon through fri day shift . My last job I left I turned on to a fellow chef friend of mine and he is now making close to 50 a year with great bennies . Another thing I enjoy is I still do some internal catering which just blows there minds away at just the simplest of menus . I did the rat race for 20 years and now I have time and more money for my children while still doing what I love . Good food can be taken many places and remember you do not have to play other peoples games . Maybe you can do as I have done and make your own game . People want good food and we should be paid to give it to them . 
Your friend in food , Douglas


----------



## kuan

Come to think of it, after paying you and your sous chef, you could still run 24 full time employees at $10/hr. I think it's do-able.

Kuan


----------



## chef1x

Josh, do you have a kitchen of 24 like Kuan wishes he had ?
K- Where do you come up with all these awesome stats?
Hee, hee,


Have a GREAT New Year!!

Don't eat too much lute(AH)fisk (I am hurt you didn't notice my special link for your sick habits ).

Have a wonderful New Year!


----------



## kuan

1x, I look at a lot of numbers. In Josh's case the place does 4 million and 14% is $560,000. Minus his salary and sous chef it should be right around $500,000. Divide that by 2080 hours (40 hours a week) and you get about $240 dollars per labor hour available to you. Figure average wage is $10/hr and you get 24 full time employees.

Kuan


----------



## joshua tomczyk

Kuan your right I was way off on total sales actually it was 1.5 mill not 4. I'm sorry just goes to show you how tired running a 14% and lower labor cost leaves me sorry for the mix up. All the other numbers were correct though.


----------



## kuan

Well, 14% at 1.5 mil is extremely low. What does that give you, two dishwashers and five full time cooks? I don't know how that figure came about. I still think that a bonus program based on percentage labor is silly. The restaurant can still lose money. What if you make labor at 13% and FOH screws up? Will you get your bonus if the restaurant can't pay its bills?

Kuan


----------



## joshua tomczyk

Well that is a totally different subject I have been told by out going managers to never accept this type of bonus of program from the owners because they always seem to get screwed or at least they think they did. 
Wow you are right on I have 5 cooks and 2 dishwashers.
The biggest thing is we have a totally from scratch kitchen. We make glace form bones, bake our own bread, make all our deserts in house etc. etc. etc
That is where I see the problem there is allot of labor involved in this production and I believe it hurts us in the end. Everything gets done but no one is happy about it. When people are not happy the work they do is not as good as it could be.


----------



## kuan

Well that was a rheterical question. Of course you don't get a bonus if the restaurant goes under. Not even if you run the whole place by yourself!  But those outgoing managers are right Josh. You will always feel that you got screwed, mainly because your numbers will never agree with that of the Profit and Loss statement. MOST people will tell you that being happy at a job is not a matter of 1-2k dollars a year. Most will be happy to take an extra day off with no pay rather than be paid doubletime for that day.

Kuan


----------



## chef1x

[Well, duh I guess that should be obvious.

What I mean is what source do you use for industry standards to compare against, like 14%? Just based upon experience? I've always used 25% as a guideline, but I've also only been involved in full-service fine and casual dining. I haven't looked it up yet but I would assume big corps like the one I may be joining have both high food and labor.


----------



## kuan

You can use the NRA sourcebook. In my case it's a lot experience. You sit in enough *&@!# meetings and you get a feel for what numbers should be based on the types of establishments. That's if you're paying attention.

Kuan


----------



## slavegirl

sorry, small aside...

FUEGO!

I eat there everytime I visit Tuscon, which is a few times a year!
Delicious!

:bounce:


----------



## ritafajita

I'd be interested to know, what is the current labor cost? How much would it have to decrease to meet the goal? I mean, if its at 28% now, wow, that's a pretty big challenge. But if its currently at 18%, maybe that's a little (stess on "little"!) more manageable. What about payroll tax? Is that included? Comp. insurance? I've never worked anywhere with such a low percentage. I agree with the 25% goal, although I struggle to achieve even that (and rarely do). More volume would certainly help my situation, but only to a point. If anyone out there actually is operating (happily operating, that is) at 14% labor, I'd love to know the secret!!

I'm relieved to read comments re: profit driven bonuses. I've never been wild about that concept. I already pay people, don't I? Better than most same type businesses where I live. I mean, if we busted A** for a quarter & did really well, I might want to give bonuses for that as a reward. But not as an incentive. I guess even that could get tricky after a while, though. I'm certainly not there yet, in any event.

What is the correct way to figure in sales tax, by the way? I know that, technically, sales tax is money a business is holding in trust (sort of) for the state, but when I fill out that return every month, it starts to feel as much like an expense as everything else. Should labor/food cost be figured on the before tax price? And, if so, why? This is a constant source of confusion for me.

RF


----------



## panini

MsFajita,
I was the same way with the sales tax issue. I actually hate the whole d thing of collecting monies for the state, and all the liabilities thaty come along with it. In my state no one can even understand the the statute reguarding baked good, including the tax office. 1 cookie-taxable, 5 cookies-taxable, 6 cookies in a bag-non taxable. A small strudel-taxable, cut it into six slices-non taxable. Anyway, you can add it to your gross sales and expense it as sales tax. Now, I actually make seperate deposit into a private tax account and pay the monies from there. I just set up the registars to break out the ST from daily sales. This way it does not feel like an expense. If you can get quartley reporting, you can even make a little interest. We still follow the same reporting as gross sales but it doesn't distort my checking account to have that extra monies in there.
My payroll is tipping the 24% mark. I really don't hav3e a choice, I truly need skilled labor, and the unskilled persons who stay to be trained should make the same. The 24% does not include me though 
This time of year I will run 30-40% labor. I calculate annually so as not to cut persons out when we slow down. This puts a little pressure on meeting forcast and the only negetive would be a shortfall which come out of my 12%


----------



## kuan

In general, you want to figure labor and food percentages pretax so as not to inflate your true revenues. Running labor at 14% all depends on the type of operation. It takes the same amount of labor to grill a filet as it does to make a reuben sandwich.

Every business should look into hiring an accountant. If you're interested in innovative solutions for your business, you should consider hiring a consultant.

Kuan


----------



## chef1x

Yep, I took some accounting seminar and it was definitely pretax. After taking the seminar, I realized it's good to know what's going on, but get a pro, on retainer or part time, it's not that much, and it will save you a bundle in the long run.


----------



## chefcoop

Hey there fellow Chefs, I've had experience with all this like many of you and from what I've seen 18% labor is fairly normal...At a prior Hotel I was working as Exec Chef and after the budget meeting for the new year the labor was dropped to nearly 15% from 18....Yes that meant I was the bqt chef as well as having to fill in on the line when it got slammed for lunch and dinner occasionally.....brutal some days.....Since then now I'm a Bqt Chef at a hall that feeds from 50-1,200...and now after a meeting today I have only one cook for bqts up to 150, 2 cooks from 150-300 and 3 cooks or more for bqts over 300...Talk about cheap!...man I'm getting too old for this cr.......anyway just wanted to share with ya all....

Ooops back on track.....a 15% labor is tough for any situation I think.....Remember Chefs, You tell them what you need to be successful and at the same time deliver customer satisfaction without cutting into the budget too much....A good GM goes a long way and last thing remember the golden rule 50% of your job is getting along with your boss the 50% is actually doing the job!...If you don't llike the terms then time to start looking. In other words if your being asked to run a labor that's ridiculous....start looking elsewhere if you have to.....later....


----------



## chefjpauley

kuan said:


> 1x, I look at a lot of numbers. In Josh's case the place does 4 million and 14% is $560,000. Minus his salary and sous chef it should be right around $500,000. Divide that by 2080 hours (40 hours a week) and you get about $240 dollars per labor hour available to you. Figure average wage is $10/hr and you get 24 full time employees.
> 
> Kuan


What about benefits, pto, holidays, overtime?


----------



## chefjpauley

Joshua Tomczyk said:


> Thanks for the input everyone.
> Here is our web sight http://www.fuegorestaurant.com/
> We are a fine dining restaurant with a huge menu and if we have the product we will make anything.
> The percentage is based off all kitchen employees including me and my Sous (salary) and based off sales before sales tax. The sick thing is when we are busy we will run 9% and lower.
> Oh on that 4-6% for exec chef I wish. We do over $4 mill a year and I make $29,500 slightly over 1/2 of one percent. Of course I am only Chef de Cuisine.


It is amazing what some chefs are willing to work for, I would tell your boss to cough up some more money or you should start looking for a new job. I don't know your credentials but I would say you shouldn't work for less than 50 after your bonus


----------



## someday

chefcoop said:


> Hey there fellow Chefs, I've had experience with all this like many of you and from what I've seen 18% labor is fairly normal...At a prior Hotel I was working as Exec Chef and after the budget meeting for the new year the labor was dropped to nearly 15% from 18....Yes that meant I was the bqt chef as well as having to fill in on the line when it got slammed for lunch and dinner occasionally.....brutal some days.....Since then now I'm a Bqt Chef at a hall that feeds from 50-1,200...and now after a meeting today I have only one cook for bqts up to 150, 2 cooks from 150-300 and 3 cooks or more for bqts over 300...Talk about cheap!...man I'm getting too old for this cr.......anyway just wanted to share with ya all....
> 
> Ooops back on track.....a 15% labor is tough for any situation I think.....Remember Chefs, You tell them what you need to be successful and at the same time deliver customer satisfaction without cutting into the budget too much....A good GM goes a long way and last thing remember the golden rule 50% of your job is getting along with your boss the 50% is actually doing the job!...If you don't llike the terms then time to start looking. In other words if your being asked to run a labor that's ridiculous....start looking elsewhere if you have to.....later....


This thread is from 9 years ago. Just saying.


----------



## chefcoop

darn...lol...man well obviously wasn't payin attention to the time line.....was just focused on the topic...oh well...cheers....P


----------



## chef1962

Why would you accept the proverbial  carrot of a bonus.When as a chef if you do not keep operational percentages what do you think will happen.The owners are hiring you to insure profit margins.Why would i accept a bonus program for being hired to do the job in the first place? Chef Keith


----------



## bigs hunter

hey chef, let me know more about your thery on labor cost im looking for new ideas for a place im consulting. there in a pinch and and fist thing is labor, then next is to stream line the menu and cut it in half its huge! and prep tim efor crappy food isnt selling anymore. thanks for your time


----------



## barbe-bleu

Hi,

First 55hours is nothing for a restaurant chef if you have the double service.

Restaurant cost is about 30% (of course this depend of type of busyness)

But this is for all staff don't forget Hall staff maybe porter or reception too.

So 14% just for kitchen can be hard or not.

At work with 1.5 M $ sales year My kitchen labor cost is 18.7% and 11.69% for hall

December (very good month) kitchen cost was 13.46%.

Depend of many factor.

Good luck.

French guy in Japan.


----------



## kris5

Hey guys , I run a restaurant /bar that does over a million a year with 5 cooks and a dishwasher counting myself , I run around 12% labor counting my salary during the slower summer months and as low as 8% during Xmas massacres. To run a good labor you need super strong cooks that can handle more than average amounts alone ,I know its hard to find them ,I have 1 super stellar cook and myself (both of us equal 2 regular cooks) and 2 mediocre cooks ,both reliable and good enough, one is somewhat slow with excellent work quality and one is faster with an attitude problem. I found to run a sweet labor you can play around with the schedule on slower days like cut everybody and work yourself on those slower days and staff up the busier days and cut out after the rush . its give and take and every restaurant is different only you can figure out what works best for you ,it all comes down to great staff and the amount of work you can do as well as how much your willing to work,I'm on for 50 hrs a week salary but rarely ever work that little, I'm a perfectionist and have to be the best regardless what cost it is to me .that's what makes a great km in my opinion. Work more and faster its the only way aside from getting better cooks


----------



## tinwhistle

If you move to Charlottesville Virginia you can run my kitchen, I shoot for 45% labor costs, and I will pay you $39,000 a year to start and promise you will not work more than 50 hours a week and get two consecutive days off almost every week.  I look forward to getting your resume!!!


----------



## mitchydachef

Industry standards vary with the type of operation, cuisine, volume and other factors. I'd say 12.5% to 14% is a good target area. I've ran lower and higher. With 30 plus years in this industry its the one area which stresses me out the most


----------



## kris5

tinwhistle said:


> If you move to Charlottesville Virginia you can run my kitchen, I shoot for 45% labor costs, and I will pay you $39,000 a year to start and promise you will not work more than 50 hours a week and get two consecutive days off almost every week. I look forward to getting your resume!!!


i live in Canada and make 46k per year plus tips and only because i spent 20 years being a kitchen mercenary squeezing every last penny per hour before moving on for more ,its hard for a cook with no papers to get to the top of this industry . Im fortunate ,one of the lucky ones although luck was not a factor . I wouldn't move for anything but mind blowing at this point , its been months since i posted in here and my numbers are even better . One more tip aside from what I've already said would be to allocate as much of your hours doing real kitchen work , don't slack on office work just do it really fast .the best chefs are right there in the shit with their bros


----------



## chefhays

I've worked in a restaurant where they wanted 14% I was a manager Applebees where it was 12% kitchen labor the restaurant and I'm running now my boss wants 11% . It's pretty damn rough that's for sure. I had 11.3 last week


----------

