What is Labor Cost Per Meal and Why Should You Care?
If you run a restaurant, cafeteria, or any food service establishment, labor cost is a critical metric. Labor Cost Per Meal measures how much you spend in labor to produce a single meal. Understanding this helps you price menu items properly, boost profit margins, and make smarter staffing choices.
How to Calculate Labor Cost Per Meal
The formula is simple:
[\text{Labor Cost Per Meal} = \frac{\text{Total Labor Cost}}{\text{Number of Meals Served}}]
Where:
- Labor Cost Per Meal (LCM) is the labor cost per meal in dollars
- Total Labor Cost is the total amount spent on labor
- Number of Meals Served is the total meals served in the same period
Calculation Example
Imagine you run a bistro. Over the past week, you paid your staff $4,800 and served 600 meals.
Variables:
- Total Labor Cost: $4,800
- Number of Meals Served: 600
[\text{Labor Cost Per Meal} = \frac{4{,}800}{600} = 8]
You are spending $8 per meal in labor for each meal you serve.
Benchmarking Table
| Meal Price | Target Labor Cost (30%) | Actual Labor Cost |
|---|---|---|
| $15 | $4.50 | $8 (over budget) |
| $20 | $6.00 | $8 (over budget) |
| $25 | $7.50 | $8 (slightly over) |
| $30 | $9.00 | $8 (on target) |
Ways to Optimize
- Improve staff training for efficiency
- Optimize scheduling based on peak hours
- Invest in labor-saving kitchen equipment
- Retain employees to reduce turnover costs