Labour cost percentage for Irish pubs, restaurants and cafés: how to work it out

Labour is usually the biggest cost you can change week to week, and the roster is where you change it. The number most operators use to keep an eye on it is labour cost percentage. It's simple to calculate, but in Ireland there are two common ways to get it wrong: leaving out the costs that sit on top of wages, and measuring against takings that still include VAT. This guide shows how to do it properly for an Irish pub, restaurant or café, with a worked € example.

The formula

Labour cost % = total staff cost ÷ sales excluding VAT × 100

Both figures must cover the same period. A week is the most useful for rostering decisions; a month or a quarter is better for spotting trends.

Step 1: total staff cost, not just wages

For an Irish venue, add these up:

Some operators also add staff meals, uniforms, training and agency staff. Do that if it helps, but be consistent: the number is only useful if you calculate it the same way every week.

Why leave and public holidays belong in it

A full-time employee gets up to four working weeks of paid annual leave and the benefit of 10 public holidays. That's roughly six paid weeks a year when they aren't working. If you only count wages for hours worked, your labour percentage looks fine in a normal week and jumps every time someone takes leave or a public holiday falls. Building in an allowance smooths that out:

• Annual leave: about 8% of pay for hours worked is a reasonable allowance, because many staff, especially part-timers, earn leave at 8% of hours worked.
• Public holidays: 10 days is about two weeks a year for a full-time five-day worker, so about 3.8% of weekly basic pay (2 ÷ 52). Part-timers who qualify (40 hours in the 5 weeks before) and don't normally work that day get a fifth of their weekly pay, which works out at a similar proportion.

Employer PRSI

Employer PRSI is charged on all of the week's pay at the rate that applies to that week. Our guide to employer PRSI for hospitality explains the €552 threshold and why one extra hour can cost nearly double.

Step 2: sales excluding VAT

Take VAT out of each category at its own rate.

The 9% rate for restaurant and catering services replaced 13.5% on 1 July 2026, with no end date announced. Check Revenue's VAT pages for any item you're unsure about. Our VAT rates for hospitality guide covers the detail.

A worked example: a gastropub week

This is an illustrative example, not a real venue. A gastropub has a week in October 2026 with these takings, including VAT:

• Food: €18,530 (9% VAT)
• Drinks: €24,600 (23% VAT)
• Gross takings: €43,130

Net sales:

• Food: €18,530 ÷ 1.09 = €17,000.00
• Drinks: €24,600 ÷ 1.23 = €20,000.00
• Net sales: €37,000.00

Staff cost for the week:

(The €6,200 and €4,020 are the full-timers' and part-timers' pay including Sunday premium, which add up to €10,220.)

Labour cost %: €12,455.55 ÷ €37,000.00 × 100 = 33.7%

Three ways to get the wrong answer

The bottom figure looks like a great week. The top one is the real cost.

The July 2026 VAT change and your comparisons

If your menu prices didn't change on 1 July 2026, the same gross food takings now include less VAT. In the example, €18,530 of food takings would have been €16,325.99 net at 13.5%, and is €17,000.00 net at 9%: €674.01 more net sales a week with nothing else changing.

On the same staff cost, labour would have been 34.3% under the old rate and is 33.7% now. So when you compare this autumn's labour percentage with last spring's, part of the improvement may be the VAT rate rather than better rostering. Compare like with like.

What's a good labour cost percentage?

There's no official benchmark for Ireland, and anyone quoting a single "right" number is guessing. It depends on what you sell (a wet-led pub has very different labour needs from a full-service restaurant), your opening hours, your rates of pay and how much you buy in prepared. The useful comparison is with yourself: the same weeks last year, the same day of the week, before and after a menu or roster change.

What moves it:

• Rostering to the trade. Matching staff to busy periods (match days, Sunday lunch, functions) and pulling back on dead midweek afternoons.
• Split shifts across lunch and dinner instead of one long shift through the quiet middle, within the rules on breaks and rest.
• Watching the €552 line so hours just over the PRSI threshold are a decision, not an accident.
• Minimum wage changes. €14.15 now, with €14.94 announced for 1 January 2027 (not yet law). Every adult on the minimum would cost 79 cent an hour more in basic pay.

Labour cost per hour of trade

Labour percentage tells you the overall picture. To fix it, look at the roster day by day. Compare each day's net sales with the hours rostered that day: a Tuesday with €1,800 of net sales and 40 staff hours is a very different shape from a Saturday with €9,000 and 110 hours. The quiet days with plenty of hours are usually where a roster can change, not the busy ones.

Doing it every week

1. Get sales by category, including VAT, from your till for the week.
2. Strip VAT out of each category.
3. Get hours and pay per person for the same week.
4. Add Sunday premium, employer PRSI and the leave and public holiday allowances.
5. Divide and multiply by 100.
6. Write it down next to the week's notes: weather, events, who was off.

The labour cost calculator does steps 2 to 5 for you.

How ShiftComplete helps

ShiftComplete doesn't calculate labour cost in euro, so use the calculator or your own spreadsheet for the money. What it gives you is the hours. You build the roster around staff availability and the week's events, and you can see hours by person on the roster as you go. With clocking in switched on, you can download a spreadsheet of clocked hours per person for the week, which is the starting point for the wages line.

It costs €1.99 per active staff member per month, free for 60 days, with no card and no contract.

This is general information, not tax or accounting advice.