Labour Cost in Catering: Why UK Operators Get It Wrong
By On The Pass Consultancy | Category: Kitchen Efficiency | Reading time: 5 min | Keywords: catering labour cost UK, hospitality staffing costs UK, kitchen labour percentage, how to reduce labour costs catering
Ask a catering operator what their biggest cost is and most will say food. Ask an accountant who works with catering businesses and they'll say labour. The gap between those two answers explains more about how UK hospitality businesses get into financial difficulty than almost anything else.
Food cost gets managed. There are systems for it — recipe cards, GP targets, purchasing specs. Labour cost tends to get managed reactively: extra hours when it's busy, a quick cut when it's quiet, and a vague feeling at the end of the month that the wage bill was either fine or slightly too high. In a sector where labour typically accounts for 25–35% of turnover, vague isn't good enough.
The Labour Cost Problem in UK Catering
The structural challenge with labour cost in UK catering is that it's both the most controllable and the most emotionally difficult cost to manage. Food costs are about ingredients. Labour costs are about people, the people who showed up for their shift, who you rely on, who you don't want to let down by cutting their hours.
That difficulty is real and it matters. But the financial reality is equally real: a labour cost that consistently runs above the right level for your operation will eventually make the business unviable, regardless of how good the food is or how loyal the team.
The operators who manage their labour cost well aren't harder on their teams. They're clearer about what the business can support, more organised in how they schedule, and more deliberate about how they match staffing levels to actual demand. The starting point is knowing your number.
What the Right Labour Percentage Looks Like
Labour cost as a percentage of turnover varies significantly across different types of catering operation, and using the wrong benchmark will cause you to either understaff and damage the quality of your service, or overstaff and absorb costs the business can't sustain.
For full-service restaurants in the UK, a combined kitchen and front-of-house labour cost of 28–35% of turnover is the standard working range. Operations at the lower end tend to have efficient kitchen layouts, well-trained teams, and a menu designed with labour in mind. Operations consistently running above 38–40% in this category are almost always carrying more labour than the business can support.
Café and casual dining operations typically run at 25–32%. The menu is generally simpler, prep is lighter, and service is less labour-intensive than full-service dining. If your café is running labour consistently above 35%, it's worth examining whether your scheduling reflects your actual trading pattern or whether it's been set once and left.
Contract catering has a different model — labour is often structured into the contract itself and managed against a predetermined ratio — but the principle of knowing your number and monitoring it consistently applies across every format.
The figure that matters most isn't the headline percentage. It's the trend. A labour cost that's holding steady at 32% is a managed business. A labour cost that was 30% six months ago and is now 33% with no obvious reason is a business that needs to understand what changed — and act on it before it moves further.
The Scheduling Trap
The most common labour cost problem I encounter in UK catering operations isn't overpaying staff or carrying too many permanent positions. It's poor scheduling — rotas built around habit and preference rather than around the actual shape of the trading week.
Most catering businesses have a clear and consistent trading pattern. Footfall peaks at predictable times, covers follow a pattern across the week, and quiet periods are usually reliable. The rota that fits that pattern tightly — staffing up for genuine demand and pulling back when demand doesn't justify the hours — is the rota that keeps labour cost under control.
The rota that gets built out of habit is a different thing. It tends to replicate last week's rota regardless of whether last week's trading justified it. It tends to fix staffing levels that were appropriate at a busier point in the year and never gets reviewed when demand drops. And it tends to accumulate ad hoc additions — an extra person here, a shift extended there — that each seem reasonable in the moment but collectively push the wage bill well above what the trading level supports.
The discipline of scheduling against forecast rather than habit — using your actual sales data to set staffing levels for the coming week — is one of the most straightforward labour cost improvements available to most operations. It requires consistent data and a willingness to have honest conversations with the team when the numbers say you're overstaffed on a particular shift. Neither of those is especially complicated. Both are consistently underdone.
The Cost of High Turnover
Labour cost isn't only about hours and wages. In UK hospitality, staff turnover is one of the most significant and least-discussed labour costs, and it sits almost entirely off the labour percentage figure.
Recruiting a kitchen team member costs money — advertising, management time, agency fees if you use them. Training a new starter costs time — yours, your senior chef's, and the operations, as service quality and speed drop during the induction period. the disruption of losing an experienced team member — someone who knows the menu, knows the standards, knows how the kitchen runs — has a real cost to consistency and customer experience that flows through eventually into revenue.
Retention is therefore a labour cost issue, not just a HR one. The businesses that invest in developing their teams, that pay fairly, that communicate clearly and treat people like professionals rather than pairs of hands, tend to retain staff longer and spend less on the recruitment and retraining cycle. That investment doesn't always show up immediately in the labour percentage — in fact, paying slightly above the market rate for reliable, experienced people can push the percentage up in the short term. But across a full year, the saving on turnover typically more than compensates.
Connecting Labour to Menu Design
One of the most useful things you can do to manage your labour cost is to look at your menu through a labour lens rather than just a food cost lens. Labour-intensive dishes — ones that require long prep times, high levels of skill, or significant finishing time during service — carry a labour cost that isn't captured in your recipe costing but is absolutely real.
A dish with a 28% food cost that requires 25 minutes of skilled prep per portion is not as profitable as a dish with a 30% food cost that requires 8 minutes. The GP from the food cost calculation looks better on the first dish, but when you add the labour contribution per portion, the picture changes.
Menu engineering with a labour component — assessing your dishes not just by food margin but by the total time cost they place on the kitchen — is an approach that's common at the top end of the industry and almost entirely absent in independent UK catering. It's worth doing. The insights it produces tend to simplify menus, reduce prep burden, and improve the working conditions for the kitchen team — while improving the overall margin at the same time.
How We Approach Labour Cost at On The Pass Consultancy
When we review a catering operation, labour cost is always part of the picture — alongside food cost, purchasing, and stock control. We look at how the business is currently scheduled, how the labour percentage tracks against turnover, and where the opportunities are to bring it into the right range without compromising the quality of what the kitchen produces.
In this series, we've covered recipe costing, purchasing, and stock control. Labour is the fourth piece. Together, they're the operational foundation that determines whether the business is genuinely viable — not just busy.
Is your labour cost working against you? Get in touch for a free initial consultation — we'll look at your operation and give you an honest picture of where your costs are going.
Free Consultation — onthepassconsultancy.com/contact
In this blog series we looked at
Member discussion