How to Reduce Labour Costs in a Restaurant or Bar (Australia, NZ Guide, 2026)

Reducing labour costs in a restaurant or bar comes down to five things: weekly budgeting before the roster is built, tracking actuals against roster every day, building rosters from a template (not from scratch), end-of-shift check-ins that catch overruns early, and a simple labour cost percentage target to measure against. Most multi-venue operators are sitting on 2–5% in unnecessary labour spend without knowing it, and you won't find it by looking at monthly reports. This guide covers each of the five in practical detail, based on what we've seen work across hundreds of venues in ANZ.

At one venue we worked with recently, a 2% reduction in wage costs translated to $40,000 in additional profit per year. That's not a dramatic operational overhaul, it's the result of five straightforward habits most venues aren't doing consistently.

What Percentage Should Labour Costs Be in Hospitality?

A well-run multi-venue hospitality group typically targets labour costs between 20–32% of revenue. But the right target depends on your venue type:

• Cafes and quick-service venues: 20–25%
• Full-service restaurants and bars: 25–30%
• Fine dining: 27–32%

These are ANZ benchmarks. US figures typically run 2–3% lower due to tipping culture reducing employer wage burden, so don't benchmark yourself against US benchmarks if you're running venues in Australia or New Zealand.

If you're above the top of your range, there's almost certainly 2–4% sitting in scheduling inefficiency, roster errors, or a lack of day by day shift tracking — not in the cost of your people, or the fact you are paying them too much.

To calculate your labour cost percentage: divide total labour spend (wages + on-costs like super, holiday pay, and uniforms) by total revenue for the same period, then multiply by 100. If you spent $18,000 on labour in a week where revenue was $60,000, your labour cost percentage is 30%.

How Do You Reduce Labour Costs Without Cutting Staff or Shifts?

The biggest gains in labour cost reduction rarely come from cutting shifts, they come from fixing scheduling precision and accountability. Three things that consistently work without trying to pay lower wage rates.

1. Match your roster to actual forecast demand, not what you rostered last week. Most venues over-staff by 1–2 people during shoulder periods simply because the roster is copied without adjustment. Start each week by reviewing what happened on the same day last year, adjust for any known events or risks, and build from there.
2. Catch overruns before they compound. A two-minute manager debrief at the end of each shift — comparing actual hours worked versus the roster — surfaces problems you can still act on this week. The venues catching labour blowouts early consistently run 2–3% tighter than those reviewing at month end.
3. Track labour cost percentage daily and weekly per site, not monthly across the group. Monthly averages hide site-level problems. A venue running at 36% this week that budgeted 30% needs that signal now, not in four weeks.

How Do Australian Award Rates Affect Your Labour Cost?

For Australian venues, award compliance is one of the most underestimated labour cost factors. Weekend penalty rates, public holiday loadings, and age-based pay progressions can push your effective wage cost significantly above your base rates — especially if your rostering system isn't applying them accurately.

• A full-time FOH employee working Saturday attracts a 125% penalty rate under the Hospitality Industry (General) Award; Sunday is 150%. A venue running three sites where one manager applies these and two don't will see a 5–10% labour cost variance between locations that looks like a performance gap but is actually a payroll error.
• A Melbourne venue open on AFL Grand Final Friday (a Victoria-only public holiday) owes double time plus a penalty to casual staff — but if the roster system isn't aware of state-specific gazetted holidays, it calculates the shift at a standard Saturday rate. On a $15,000 revenue day with 12 staff, that miscalculation alone can cost $800–$1,200 in underpayments that surface months later as a back-pay liability.
• Under most hospitality awards, hours beyond 10 in a single shift or 38 in a week attract overtime loadings of 150–200%. A staff member picking up extra shifts during a busy event week can quietly cross both thresholds. Without automated alerts, most managers only discover it when they see the payroll run — by which point it's already been paid.

Loaded's Awards Compliance feature auto-applies the correct base rates, penalties, and overtime rules to every rostered and actual shift — so your labour cost reports reflect what you'll actually pay, not what you hope you'll pay. Award rates are updated annually as classifications change.

If you're in New Zealand, the equivalent risk is around Holidays Act compliance and Mondayisation rules — worth a review with your payroll provider if you haven't looked at it recently.

Why Weekly Labour Budgets Are the Biggest Lever You Have

When venues get their weekly budgeting right, everything else becomes so much easier. The places that are getting the best results are:

• Doing their budgets or sales targets well before the week starts and being conservative.
• Looking closely at what happened in previous years on the exact same day.
• Dialling in events, functions, and other opportunities, as well as any risks that might affect revenue.
• Getting their managers involved in providing feedback in their shift report on how accurate the roster was.

Without this sorted, everything else just gets harder.

How to Accurately Track Labour Costs Week by Week (With a Free Template)

Having a simple weekly labour cost tracking report makes a huge difference. We have this automatically in Loaded, but there's something that makes the information more important and tangible when you take it out of the software and write it down. It's even better when you can get your managers doing this each week. The venues getting the most value are the ones that:

• Take the time to review and write down their actual costs versus what they planned.
• Notice when things keep going over budget in the same ways and create actions to solve them.
• Talk about what worked and what didn't in a weekly management catch-up.
• Prioritise the specific improvements they're going to make in their upcoming roster and shift management each day.

We've got a template for this that works really well — grab it right here.

How to Build a Roster That Keeps Labour Costs on Budget

Start with a baseline roster template rather than building from scratch each week. This immediately shows you whether your planned adjustments increase or decrease your labour cost, so you're making an informed call, not a guess.

Before finalising the roster, run through these four checks:

1. Are there events or functions this week that should change your staffing levels?
2. Is anyone on leave or unavailable, and do you have cover planned?
3. Are all pay rates accurate and up to date — including any age-based progressions and recent award changes?
4. What is your projected labour cost percentage at the current roster, and does it match your budget for the week's forecast revenue?

The roster isn't finished until you've answered all four. Get the full roster checklist over here.

How to Run an End-of-Shift Labour Check (The 2-Minute Manager Habit)

This last one is simple but it's made a massive difference for lots of venues. At the end of each shift, managers check and approve all hours worked, then send a quick message (text, email, whatever works) to you or the General Manager answering:

• Did we make more or less than we expected today sales wise, and how much?
• Did we spend more or less on labour than planned in the roster, and why?

It takes about two minutes, but it helps catch problems early and gives owners and managers a really clear picture of what's actually happening in their business.

How Much Could Reducing Labour Costs Actually Save You?

One thing that surprises almost everyone when they join Loaded is seeing exactly what small improvements in wage costs can do to their bottom line. We use our net profit calculator to show this, and it's often a bit of an eye-opener.

For example, we worked with one venue that discovered a 2% reduction in their wage costs would mean an extra $40,000 in profit each year. That's the kind of number that makes you sit up and take notice.

Frequently Asked Questions About Labour Costs in Hospitality.
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What is a good labour cost percentage for a restaurant?

Most restaurants and bars target 20–32% of revenue. Quick-service venues can run tighter (20–25%); fine dining runs higher (27–32%). Multi-venue groups should be looking at this daily and weekly per site, not monthly.

How do I calculate my restaurant labour cost percentage?

Divide total labour spend (wages + on-costs) by total revenue for the same period, then multiply by 100. If you spent $18,000 on labour in a week where revenue was $60,000, your labour cost percentage is 30%.

How can I reduce labour costs without cutting staff wages?

The biggest gains usually come from smarter rostering (matching staff levels to real forecast demand), weekly tracking (catching overruns early rather than at month end), and end-of-shift accountability check-ins with managers.

How quickly can I realistically reduce labour costs?

With consistent weekly budgeting and rostering discipline, most venues see 2–4% improvement within 8 weeks. Some operators running our bootcamp-style implementations have seen up to 12% improvement.

What causes high labour costs in a restaurant?

The most common causes are rostering too many staff relative to forecast demand, inaccurate pay rates (especially for junior staff on age-based awards), not catching overtime before it accumulates, and reviewing labour cost monthly instead of weekly. For multi-site groups, the biggest driver is usually managers building rosters without a labour cost target in front of them — the roster looks fine, but the percentage is already over budget before the week starts.

What is a labour cost percentage and how do I use it?

Labour cost percentage is your total labour spend (wages plus on-costs like super, holiday pay, and uniforms) divided by your total revenue for the same period, expressed as a percentage. The most important thing is to use it as a weekly scorecard per site — not a monthly group average. A venue running at 34% this week that budgeted 30% needs to know that now, not at month end.

Is 30% a good labour cost for a restaurant?

30% is a reasonable benchmark for a full-service restaurant or bar in ANZ. Well run cafes typically target 20–25%; fine dining runs 27–32%. But the more useful question is whether you're hitting your own weekly budget — a venue consistently running at 32% with a plan is in better shape than one averaging 30% with no visibility into where it's going.

Labour cost management series

This guide is part of Loaded's labour cost series for hospitality operators. Continue reading:

Restaurant labour cost management: the complete guide — the full framework for multi-venue operators, from the formula to the five habits that keep prime cost under control.

What's a good labour cost percentage? Benchmarks by venue type — how to read industry benchmarks and what actually matters for your format.

How to reduce labour costs without cutting service — five specific levers that bring the number down without thinning out a busy floor.

Managing labour costs across multiple venues — why labour gets harder with every venue you add, and what good looks like across a group.

Real-time labour vs revenue: why month-end is too late — the case for seeing the number while you can still act on it.