Wage percentage: the number that decides your month.
Wages are the largest controllable cost in most venues and the one that moves fastest. A roster that worked in June can be expensive by September without anything visibly changing.
The calculation
Total wage cost ÷ sales for the same period × 100 = wage percentage.
Total wage cost means the real cost of employing people: gross wages, superannuation at 12%, and the on-costs you actually carry such as workers compensation and leave accrual. Gross wages alone will understate your labour by roughly a seventh, which is the difference between a comfortable month and a tight one.
Use sales excluding GST. Compare like with like: a week against a week, not a four-week month against a five-week one.
Where it should sit
| Line | Where we want it | Where it starts costing you |
|---|---|---|
| Wage cost | at or under 30% of sales | 35% is where we start calling it a leak |
| Food and beverage cost | at or under 36% of sales | 40% and the menu needs work |
| Prime cost, wages plus stock | at or under 62% of sales | 68% and the venue is running for someone else |
| Rent | at or under 10% of sales | 15% and the site has to earn its keep |
The bands we work to on a standard single-site venue. Licensed venues, function work and heavy takeaway sit differently, which is part of the conversation.
Prime cost, wages plus stock together, is the number we watch hardest. A venue can carry high wages with a tight kitchen, or a generous menu with a lean roster. It cannot carry both.
When wages run hot, it is usually structure
- Opening and closing labour. Full staffing for trade that has not arrived yet or has already gone.
- Shift length. Two four-hour shifts often cost less than one eight-hour shift that spans a dead middle.
- Weekend and penalty exposure. A Sunday roster built like a Wednesday roster costs substantially more.
- Classification drift. Staff doing work above their classification, paid below it, which is a liability as well as a cost.
- Salaried managers absorbing hours. The cost is real even when the roster looks lean.
Cutting hours is the blunt fix and usually the wrong one, because it costs you service. Reshaping when the hours sit is the better one, and it is the conversation we have with the numbers in front of us.
Run the 60-second Margin Check on your own figures. Nothing is sent anywhere; it runs in your browser.
Most venues sit on Hospitality Margin Protection at $990 + GST a month, which carries the bookkeeping, payroll for up to five staff and BAS oversight underneath the monthly margin review.
Straight answers.
Should wage percentage include the owner?
If you work in the venue, cost your own labour at what it would take to replace you. A business that only works because you are unpaid is not a business that works.
Weekly or monthly?
Weekly for running the venue, monthly for the trend. Weekly figures bounce around too much on their own.
What about agency and contract staff?
Include them. They are labour covering trade, whatever the invoice says.
Stop finding out in July.
Fifteen minutes, direct with Pink. We look at your real numbers and tell you where the margin is going.