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.
Impact and considerations
Provides more effective labor management metrics for the restaurant and hospitality industry, helping operators move from reactive to proactive management and optimize staffing.
Key points
- Labor cost percentage is a lagging indicator that can't explain why or what to do next
- CPLH and SPLH are predictive metrics that distinguish staffing vs. spend issues
- BLS: Q4 2025 wages rose 6.3%, output only improved 1.8%
- Adding staff can sometimes lower labor cost percentage, as in Chili's case
Sources and time
- Primary source
- Hospitality Technology
- Other sources
- 0
- First source publication
- 6 Aug 2026, 00:11
- Page published
- 12 Aug 2026, 14:16
- Last updated
- 6 Aug 2026, 00:11
- Original links
- Hospitality Technology：Your Labor Cost Percentage is Lying to You (opens in a new tab)Primary source · en · Published 6 Aug 2026, 00:11