Understanding Labor Cost Percentage
Key strategies for restaurants. In the fast-paced restaurant industry, where margins are razor-thin, every decision can either make or break a business. One of the most critical and often overlooked elements is managing labor costs. For restaurant owners and managers, understanding and controlling labor cost percentage is vital for both profitability and long-term sustainability. So, what exactly is labor cost percentage, and why is it such a pivotal metric for restaurants? Let’s break it down. The Labor Cost Percentage: What It Is and Why It Matters. Labor cost percentage is the proportion of your total revenue spent on employee wages, benefits, and related expenses. It provides a clear view of how efficiently a restaurant is allocating its resources. Generally speaking, industry benchmarks suggest that labor costs should account for approximately 25-35% of total revenue. However, these figures can fluctuate based on your operational model, the type of cuisine you offer, and even your geographic location. In highly competitive markets or for high-end establishments, labor costs may run higher. The key is to find an optimal percentage that balances operational costs without compromising quality or service. But why should restaurant owners pay attention to this figure? A high labor cost percentage can eat into profits, making it harder for a restaurant to stay competitive. On the other hand, too low a labor cost could mean understaffing, which can result in poor customer service, employee burnout, and ultimately, loss of revenue. Understanding labor costs and managing them effectively can dramatically impact your bottom line. The Magic Number: Targeting the Optimal Labor Cost Percentage. The next logical question is: how do you determine your restaurant’s target labor cost percentage? As mentioned earlier, the benchmark range for most restaurants is between 25-35%…
Hospitality Tip Credit Elimination Will Harm NJ’s Restaurant Owners, Servers, and Restaurant-Goers Alike
The industry’s job gains come despite heightened uncertainties. We are all accustomed to tipping our servers and bartenders when enjoying a meal and drinks at a dining establishment. In fact, during the pandemic, many customers tipped more frequently and generously to support service workers during the challenging time. Technology has played a role, too, as digital tablets with pre-selected tip amounts—often in the 20-25% range—have normalized higher tip percentages. Lastly, tipping has evolved from a discretionary act of appreciation to a more expected norm. However, a proposed bill in the New Jersey State Assembly (A-5433) may not only upend these workers’ ability to earn the same wages but also threaten financial hardship to New Jersey’s restaurant industry and raise the cost paid by customers for a restaurant meal. Currently, tipped employees earn a portion of the minimum wage while on the clock, and make up the difference toward that hourly wage with tips. Thanks to the tip credit system that’s in place, employers can count tips toward meeting the minimum wage requirements for those workers, which keeps payroll down, while incentivizing tipped employees to provide excellent service. A-5433 aims to raise these workers’ hourly wage to the state minimum wage incrementally over five years, with a concomitant phaseout of the credit employers take for tips their employees receive. The bill states that the “eventual elimination of the tip credit…will require that the employer pay the full amount of the minimum wage without regard to any amount of tips received by the employee.” This ultimately will leave restaurant employers paying their wait staff more and tipped employees earning less. Although the objective of the bill is to ensure tipped employees get an equitable cash wage in line with other workers, this will backfire if implemented. Establishments will have to raise prices to accommodate increased labor costs, will have to pay more in wages and payroll taxes, and may be forced to cut staff (or close their establishments altogether). Patrons will be made aware that food and beverage prices have increased to make up for the elimination of the tip credit, and they will tip less because the people waiting on them are earning more per hour AND the cost of dining out is higher…
Bielat Santore & Company – Restaurant Industry Alert
MARKET TO MARKET
ANOTHER BIELAT SANTORE & COMPANY TRADE
NORMANDY BEACH: Lasolas Market (& Deli), situated at 3591 Route 35 North, Normandy Beach, Ocean County, New Jersey, has been sold, as confirmed by Robert Gillis, the real estate agent with Bielat Santore & Company, Allenhurst, New Jersey, who managed the sale. This high-volume, one-stop-shop market has been successfully operated by the same family for over 20 years. The new owners intend to run the 2025 season in a manner consistent with previous years, while also introducing their own unique specialty products. To facilitate a smooth and seamless transition, the former owners and key personnel will remain on site throughout the entire season. Lasolas Market is open seven days a week, May through September and then closed for the winter season…
Contact Robert Gillis, 732.673-3436 for additional information.
We invite you to visit our website, where you will find all our current listing inventory, a library of helpful industry resources and a collection of client testimonials expressing their assessments of our work and our service within the restaurant industry.
A voice for our industry. If you find these weekly bulletins informative and beneficial, we kindly ask that you write a brief Google review providing a vote of your appreciation. Simply click this link and leave a review. Thank you.
Restaurant Chains Turn to Value and Marketing
As they navigate a tough market. Restaurant chains entered 2025 expecting smoother waters as inflation cools and the uncertainty of the election was in the rear-view mirror. What they’ve instead found was even more choppiness and yet more uncertainty. The consumer was not quite as ready to start spending as many expected, and then talk of tariffs and trade wars dampened consumer sentiment and they started cutting back. All but a few restaurant chains reported weak sales. Among restaurant chains that have reported earnings thus far, median same-store sales declined 1%, continuing a run of generalized sales weakness among publicly traded restaurant chains that began early last year. In response, brands are intensifying a value push that began last year, offering even more aggressive deals and in some cases turning to familiar offers in a bid to lure customers to their doors. Some are reconfiguring promotions to find something that works. Others are increasing marketing spending and many are looking for new menu items to get customers excited about coming back. “When you’ve got an environment where there’s a pressured consumer, you’ve got to simply out-execute your competitors,” McDonald’s CEO Chris Kempczinski told analysts earlier this month. Restaurant Business tracked earnings this quarter and used the financial services site AlphaSense to get an idea what restaurant operators are doing to combat the difficult environment. Restaurant chains appear to be intensifying a value war that began in the middle of last year when McDonald’s, which had been hammered on social media over its prices for months, kicked off a $5 Meal Deal. “We are now operating in one of the most aggressive, value-driven environments we’ve seen in years,” Denny’s CEO Kelli Valade told analysts. Denny’s is running with a buy one, get one deal that allows customers to buy a Grand Slam breakfast and get a second for $1. The diner chain already had a $2 $4 $6 $8 value menu, but felt it needed something even more compelling after traffic declined sharply to start the year. The BOGO helped improve Denny’s same-store sales to flat in April…
The Synergy Between Microbreweries and Farm-to-Table Dining
A few characteristics set microbrewers apart from traditional breweries. What happens when a small brewery joins forces with a farm-to-table eatery? Some would agree it is a culinary revolution few could have anticipated. Both establishments value fresh, seasonal ingredients while creating unique flavors for local patronage. Combined with a commitment to sustainability, the synergy between these movements is as breathtaking as it is craveable. By partnering with local farms and microbreweries, farm-to-table restaurants take their businesses to the next level, cultivating an exciting brand image and attracting customers longing for authenticity and community. Above all else, this new model of local brew and bites delivers even greater profitability. Microbreweries are a type of craft brewery gaining prominence in the alcohol scene. According to a recent Brewers Association report, they accounted for 2,029 craft brewers in the U.S. in 2024, with the beer’s retail dollar rising by 3 percent from the previous year to $28.8 billion. Overall, craft brewers produced 23.1 million barrels of beer. A few characteristics set microbrewers apart from traditional breweries, making them even more appealing to beer enthusiasts. For starters, craft brewers are independent producers, typically operated by invested community members interested in job creation and boosting the local economy. Their primary customers are likely supportive neighbors who appreciate familiarity and a personalized experience. These small-scale beer makers also source high-quality ingredients to create unique flavors, paying undivided attention to the brewing process and individual methods. For instance, a microbrewer might rely more on a kegging system for storing, carbonating, and serving beer. These systems are ideal for small-batch brewing and allow them to decrease pressure manually—a perfect setup for small startups. These techniques further set microbreweries apart from commercialized brands and products. Oftentimes, the hard work pays off with more flavorful, diverse, and sustainable offerings that customers simply cannot resist…
The Psychology of Priority Management
How it can help your restaurant. The cycle of reactionary management has left business owners and management constantly busy but never getting to the priorities that would move their businesses forward. If you’re feeling this way, you’re not alone. The pace of business and life has never been faster. COVID-19, followed by significant shifts in customer traffic, has forced restaurant leaders into an ongoing state of agility—constant pivots, new systems, and rapid decision-making. While this adaptability helped us survive, many owners and operators have become constantly stuck in “firefighting-mode.” While we all learned how to pivot quickly, the cycle of reactionary management has created a critical challenge: restaurant owners and operators are overwhelmed, making it difficult to decide what is an urgent fire to fight versus what is truly important to move their business or restaurant forward. Making it more complex, our brains love the dopamine hit (the neurotransmitter associated with motivation and reward) we get from addressing urgent tasks compared to proactive, strategic work, where the rewards are further in the future. Restaurant owners and operators are not alone in falling into firefighting mode. Research from Accenture Strategy shows that executives and leaders spend an estimated 54 percent of their time on low-value, reactive tasks versus just 10 percent on strategy and innovation (as cited in the Harvard Business Review).The answer is not more time management techniques; it’s a shift to priority management. Time management focuses on scheduling, efficiency, and productivity. While these are valuable skills, they do not address the deeper issue that highlights what priorities owners and managers should spend their time on to move their business forward? In working with leaders on strategic and annual planning, a common mistake is attempting to tackle too many priorities simultaneously. Beyond managing cognitive overload, the need to prioritize arises from the reality that resources like money, time, and human capital are limited. As Goethe said: “Things that matter most must never be at the mercy of things that matter least”…
How Grocery and Convenience Stores Are Eating Into Restaurant Market Share
Check, please… or just check out? The restaurant industry’s competitive landscape for mealtime dollars is changing fast, and it’s no longer brand against brand. Increasingly, grocery and convenience stores are stealing share by offering quick, affordable, and increasingly high-quality meal options. In Revenue Management Solutions’ (RMS) recent consumer report, Check, Please or Check Out, 24 percent of surveyed diners say they buy meals from grocery stores more frequently than a year ago. This represents a larger increase than those increasing visits to fast-casual (14 percent) or full-service (11 percent) restaurants and is on par with those visiting QSRs more frequently (24 percent) (RMS Q1 2025 Dining report). The 2,000 U.S. consumers surveyed also hit up convenience stores for meals 15 percent more often than in the past. The findings reinforce a key truth: value and convenience drive decisions and restaurant operators must respond or risk losing ground. When asked about their primary motivation for increasing their purchases, respondents reported value for the money and ease. Grocery and c-store competitors recognized the opportunity. Pre-packaged meals, made-to-order sandwiches, fresh salads, and even hot food bars are no longer afterthoughts—they’re part of a growing meal strategy. Consider Buc-ee’s, the Texas-based gas station chain whose food selection is so popular that it inspires resale markets and fan pages. Customers spend a remarkable 21 minutes on average in its stores, according to The Hustle, indicating that Buc-ee’s offers an experience, not just a super-sized drink for the road. Even more concerning, high-frequency restaurant users, those eating out five or more times a week, were the most likely to increase their grocery and convenience store meal purchases. That means restaurants are losing more than just the occasional diner; they’re losing their core customers. Adding pressure, price perceptions remain high. Almost four out of five RMS respondents feel restaurant and grocery prices have increased compared to the previous month. Data from the U.S. Bureau of Labor Statistics shows restaurant price increases continue to outpace grocery inflation. In a time of economic tension, the perception of a better deal, even by a dollar or two, can easily tip the scales…
Group Dining on Ozempic?
It’s complicated. Michael Foote was at dinner with three friends at Soothr, a Thai restaurant in the East Village of Manhattan, when he looked up and noticed he was the only one eating. “We had all ordered all this food, and we were all sharing everything,” he said, “but I was chowing down, and my friends were all taking these little baby bites.” All of his dining companions were on GLP-1s, a class of drugs that are increasingly used for weight loss. Most people who take them report feeling hungry less often, and when they do eat, they can feel extremely full after a few bites. Mr. Foote, a lawyer, said that the majority of his friends are on these medications, creating a new dynamic when they go out to eat. They usually order appetizers and entrees to share; his friends will take a few bites, and he will finish the rest. “I am a 6-foot-4, 210-pound guy, and I get quite hungry,” said Mr. Foote, 36, with a laugh. They still dine out often, “even though it’s a complete charade for them.” As long as they still split the bill — which they usually do — he is fine with the arrangement. “I think if I were a more self-conscious person, I would care that I was the only person being a little Miss Piggy over here,” he said. “But I love food. Some people eat to live. I love to eat.” Morgan Stanley Research analysts estimate that 24 million people, or seven percent of Americans, will be taking a GLP-1 by 2035. As weight-loss drugs soar in popularity, diners on and off them are wrestling with a number of restaurant etiquette quandaries, and in some cases changing their dining habits as a result. Diners on GLP-1s are figuring out which types of restaurants they feel comfortable visiting; how to leave food on their plates without insulting the chef or their dining companions; and how to get the most value out of the experience. Those not on the drugs are contending with the pros and cons of going out with people who don’t do much eating…
Did You Know?
Major Upgrades to the NJ Tax-Filing System. The New Jersey Division of Taxation is modernizing its tax-filing system through a multi-phased approach. Some of the tax filing and payment systems will be temporarily shut down during the upgrade. Use the below Phase 1 links to file through the current system. Due to the system upgrade, all returns and payments included in Phase 1 (listed below) due from May 1 through May 30, 2025, will receive a 30-day extension (waiver of penalty or interest). For example, if your tax return is due on May 20, 2025, you will have until June 20, 2025, to file and pay without penalty or interest…
Employee Tip
The Fight to Support Bartenders’ Well-Being and Development. Organizations are stepping up to tackle the biggest issues in the beverage world, like providing mental health and equal opportunities for bar staff. The hospitality industry has long grappled with instability, inequality, and a lack of support for workers. More organizations are stepping up to tackle these challenges head-on, helping bartenders and hospitality professionals build sustainable careers while fostering a more equitable and supportive industry. Groups like Another Round Another Rally and Focus on Health are leading the way, driving real change for workers behind the bar and beyond. Here’s a look at how they’re making it happen…
