Mastering your salary ratio: the key performance indicator for HR.

The labor cost ratio (or labor cost) is calculated by dividing total salaries charged by turnover excluding tax. In traditional restaurants, the target is generally between 30% and 35%. In fast food, thanks to optimized processes, the target is rather 20% to 25%.

To optimize this ratio, versatility is key. Employees who can transition from order taking to assembly or dishwashing help to smooth out operations. Intelligent planning, based on sales forecasts (not intuition), is also crucial.

Be mindful of understaffing, which, while improving the ratio in the short term, degrades the customer experience and exhausts the teams (turnover is costly). The goal is not the lowest possible ratio, but the optimal ratio for your service level.

Follow this ratio weekly, and even daily. A slip-up during a week can be corrected the following week, whereas a monthly balance often arrives too late. Use your point-of-sale or scheduling software to have this data in real-time.

Include bonuses and overtime in your forecasting calculations. An underestimated payroll during a period of high activity can turn a record month in revenue into a mediocre month in profits.