Labour cost calculator: a week's wage bill as a percentage of sales

By The PrepSheet team · 10 Oct 2026

Put in this week's rota (who, how many hours, at what rate) and the sales you expect, before VAT. The calculator adds what you pay on top of wages (employer National Insurance, holiday pay and pension at this year's UK rates) and shows the full labour cost, labour as a percentage of sales and, if you add your food and drink cost, your prime cost. Nothing you type leaves your browser.

Want to track it week by week in Excel? See the Labour Cost Calculator template.

This week's rota

Role	People	Hours each	£ an hour	Age / type	Weekly cost

Sales this week £ (ex VAT) Food and drink cost % of sales (optional) Holiday pay Workplace pension Employer NI

Add your rota to see the week's labour cost.

How the cost is worked out

For each person, the week's pay is hours × hourly rate. On top of that the calculator adds, at 2026-27 rates:

Holiday pay: 12.07% of pay. Everyone is entitled to 5.6 weeks' paid holiday, and 5.6 ÷ 46.4 working weeks = 12.07% (GOV.UK: Holiday pay and entitlement reforms from 1 January 2024). It is a real cost even for salaried staff, because someone covers the shifts while they are off.
Employer National Insurance: 15% of each person's weekly earnings above the secondary threshold of £96 a week (£5,000 a year). For employees under 21 and apprentices under 25 the employer rate is 0% up to £967 a week (GOV.UK: Rates and thresholds for employers 2026 to 2027).
Workplace pension: 3% employer minimum on qualifying earnings between £120 and £967 a week, for anyone earning at least £192 a week, the automatic-enrolment trigger (GOV.UK: Review of the automatic enrolment earnings trigger and qualifying earnings band for 2026/27).

If your business claims Employment Allowance (£10,500 off the employer NI bill in 2026-27, GOV.UK: Rates and thresholds for employers 2026 to 2027; GOV.UK: Employment Allowance, check if you're eligible), employer NI is nothing until the allowance is used up, so switch NI off for those weeks. Labour % is the total cost divided by sales before VAT: VAT is not your money, and dividing by the VAT-inclusive figure flatters the percentage by a sixth.

What do UK operators actually spend on labour?

The best-sourced published UK figure is the UKHospitality × Christie & Co Benchmarking Report 2022 (abridged), a survey covering around 5,000 hospitality businesses for the six months to December 2021. Across the survey:

Payroll as a share of turnover	% of turnover
Total payroll	28.3%
Bar, kitchen and floor staff	19.0%
Managers' salaries	9.2%

It has gone up since. UKHospitality's chief executive reported in August 2024 that labour costs had risen from around 25% of turnover in 2010 to close to 30% by 2021, and that a member survey expected payroll to reach a full third of turnover on average after the April 2025 wage rise (Kate Nicholls (UKHospitality), "At the crossroads", Contract Catering Magazine, 14 Aug 2024). The National Living Wage has risen again since, to £12.71 an hour from 1 April 2026 (GOV.UK: National Minimum Wage and National Living Wage rates).

Treat these as a sense check, not a target. They are averages across very different businesses; a wet-led pub and a fine-dining kitchen will sit far apart, and your rent and sales level decide what labour % you can carry. The most useful comparison is your own percentage week on week.

Prime cost: food and labour together

Prime cost is cost of sales (food and drink) plus labour, the two costs you control week to week. Add your food and drink cost % above to see it. In the same 2022 survey, food cost was 33% of food sales (67% food GP) and payroll 28.3% of turnover; the two are measured on slightly different bases, so they don't add up to an exact benchmark, but together they put a typical UK prime cost somewhere around 60% of sales. To see labour on a single dish, use Labour per dish in the food cost calculator or the recipe cost calculator.

Using it before the week, not after

Build the rota against the sales you expect, see the labour %, and change the rota while you still can: shorten a quiet shift, or move a prep job to a day with spare hands. Checking at payroll tells you what went wrong; checking on the rota stops it.

Questions people ask

What is a good labour cost percentage for a UK restaurant?

There is no single right figure. The UKHospitality × Christie & Co 2022 benchmarks put payroll at 28.3% of turnover across the survey, and UKHospitality expected it to reach about a third after the 2025 wage rises. Compare your own figure week on week and against your sales level.

Should labour % include the owner?

Include anyone whose time the business would otherwise have to pay for. If you work in the kitchen unpaid, add your hours at the rate you'd pay a replacement, or the percentage will hide what the business really costs to run.

Do I use sales with or without VAT?

Without. Divide by the sales figure before VAT; a £12,000 week including 20% VAT is £10,000 of sales to you.

What hourly rate should I put in for salaried staff?

Their annual salary divided by 52, divided by their usual weekly hours. Holiday, NI and pension are added on top by the calculator.

Are tips and service charge included?

No. Tips that go to staff under the Employment (Allocation of Tips) Act 2023 aren't your labour cost. Leave them out of both the wages and the sales.

Sources

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