The standard benchmark for restaurant payroll is 25% to 35% of gross revenue. Where you land depends on your service style, menu prices, and local labor market.

Full-service restaurants typically run higher, around 30-35%, because you need more staff per table and often pay higher wages for skilled positions. Fast casual and quick service restaurants can run leaner at 25-30% because the service model requires fewer employees per customer. Fine dining can push even higher if you’re staffing sommeliers, dedicated prep cooks, and higher server-to-table ratios.

When calculating your payroll percentage, include everything. Hourly wages, salaries, employer payroll taxes, workers’ compensation insurance, and any benefits you provide. Some restaurant owners only count gross wages and wonder why their numbers look different from industry benchmarks. Payroll taxes alone add roughly 8-10% on top of wages before you factor in workers’ comp or health insurance.

Utah allows tip credit, meaning you can pay tipped employees a lower cash wage as long as their tips bring them to minimum wage. This keeps front-of-house labor costs lower than in states without tip credit. If you’re comparing your numbers to national averages or data from California or Washington, your percentage should naturally run lower.

A more useful metric is prime cost, which combines food and beverage costs with total labor. Prime cost should land between 60% and 65% of gross revenue for a healthy food and beverage operation. This matters because food and labor trade off against each other. A restaurant using premium ingredients might have lower labor costs from simpler prep. A scratch kitchen might have higher labor but lower food costs. Looking at them together gives you the real picture of operational efficiency.

The percentage also shifts with sales volume. During slow periods, payroll percentage spikes because you still need minimum staffing regardless of how many covers you do. During busy periods, it should drop because you’re spreading labor across more revenue. Tracking this weekly rather than monthly helps you catch scheduling problems before they compound into a bad month.

If your payroll consistently runs above 35%, look at scheduling efficiency, overtime hours, and whether your menu prices actually support your labor model. If you’re significantly below 25%, make sure you’re not burning out staff or cutting corners on service quality. Utah bookkeeping services that understand restaurants can help you track these numbers properly so you’re comparing apples to apples with industry benchmarks.