Your Labor Cost Percentage is Lying to You

Author Jim Taylor argues that labor cost percentage is a lagging indicator that misguides operators. He recommends using covers per labor hour (CPLH) and sales per labor hour (SPLH) as predictive metrics. BLS data shows Q4 2025 wages rose 6.3% but output only improved 1.8%. Adding staff can sometimes lower labor cost percentage, as in Chili's investment case.