Monitor the ratio of fixed versus

Quick answer

The ratio between fixed and variable labor costs determines how well you can respond to fluctuations in business. Many restaurants have too many fixed costs, which means they still spend a lot of money on staff during quiet periods.

The ratio between fixed and variable labor costs determines how well you can respond to fluctuations in business. Many restaurants have too many fixed costs, which means they still spend a lot of money on staff during quiet periods. You need to monitor and adjust this ratio monthly.

What are fixed versus variable labor costs?

Fixed labor costs are the wage costs you always have, regardless of your revenue. Think of your head chef, manager, and yourself as the owner. Variable labor costs are the costs that move with business volume: extra servers on busy evenings, helpers on weekends.

? Example ratio:

Restaurant with €50,000 revenue per month:

Fixed labor costs: €8,000 (chef, manager)
Variable labor costs: €7,000 (servers, helpers)

Ratio: 53% fixed, 47% variable

Why this ratio matters

If you have too many fixed labor costs, you're locked into high wage costs even during quiet months. With too many variable costs, you don't have a stable foundation and constantly need to find staff.

Ideal ratio: 60-70% fixed, 30-40% variable
Too much fixed: Difficult to cut costs during slow periods
Too much variable: No stable kitchen, quality varies

Calculate your current ratio

Grab your payroll from last month and divide all labor costs into two groups:

? Example calculation:

Total labor costs March: €15,000

Head chef (fixed contract): €3,500
Manager (fixed contract): €2,800
Owner (own salary): €2,000
Regular servers: €2,200
Extra servers (variable): €2,800
Weekend helpers: €1,700

Fixed: €10,500 (70%)
Variable: €4,500 (30%)

Signs your ratio isn't right

⚠️ Watch for these signals:

Your labor costs stay high even during revenue drops
You can't quickly respond to quiet periods
You constantly have staff shortages during busy times

How to adjust the ratio

Too many fixed costs? Consider converting a fixed contract to on-call staff for certain shifts. Too many variable costs? Give your strongest flexible staff a fixed contract for security. Most kitchen managers discover too late that they've locked themselves into too many fixed contracts during their first profitable year, then struggle during the inevitable slow months.

? Practical example:

Restaurant notices labor costs are too high during quiet January:

Problem: 85% fixed labor costs
Solution: Convert weekend servers from fixed to on-call
Result: 70% fixed, 30% variable
Savings in January: €1,200

Digital monitoring

Many entrepreneurs track this in Excel, but it takes time. With food cost management tools, you can automatically categorize labor costs and see your ratio each month without manual calculations.

How do you monitor the ratio of fixed versus variable labor costs?

Gather all labor costs from last month

Get your payroll administration and add up all wage costs: fixed contracts, on-call staff, temporary workers, your own salary. Don't forget to include payroll taxes and pension contributions.

Divide into fixed and variable

Fixed costs: all contracts that continue regardless of revenue. Variable costs: on-call staff, extra shifts, temporary workers. Unsure? Then it's probably variable.

Calculate the percentage of each

Divide fixed costs by total labor costs × 100. Do the same for variable costs. Check: they should add up to 100%. Aim for 60-70% fixed, 30-40% variable.

✨ Pro tip

Calculate your ratio every 4th week of the month, right after payroll closes. This timing gives you 3 weeks to make staffing adjustments before the next month starts.

Calculate this yourself?

In the KitchenNmbrs app you can do this in just a few clicks. 7 days free, no credit card.

Try KitchenNmbrs free →

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Frequently asked questions

What is the ideal ratio between fixed and variable labor costs?

For most restaurants, 60-70% fixed and 30-40% variable works well. This gives you a stable foundation with enough flexibility to respond to business fluctuations.

How often should I check this ratio?

Check this monthly, especially in the first months of the year. Seasonal fluctuations can significantly affect your ratio, so adjust where needed.

What if my fixed labor costs are too high?

Consider converting certain fixed contracts to on-call basis for less critical functions. Do this gradually and keep your core team for stability. Start with weekend or evening staff who aren't essential for daily operations.

Should I count my own salary as fixed costs?

Yes, count your own salary as fixed costs. Even if you don't always pay it out, it's still a cost item your restaurant carries. This gives you a more accurate picture of your true labor expenses.

ℹ️ This article was prepared based on official sources and professional expertise. While we strive for current and accurate information, the content may differ from the most recent regulations. Always consult the official authorities for binding standards.

Sources consulted

EU Verordening 852/2004 — Levensmiddelenhygiëne (2004) — Official source
EU Verordening 853/2004 — Hygiënevoorschriften voor levensmiddelen van dierlijke oorsprong (2004) — Official source
EU Verordening 1169/2011 — Voedselinformatie aan consumenten (2011) — Official source
NVWA — Hygiënecode voor de horeca (2024) — Official source
NVWA — Allergenen in voedsel (2024) — Official source
Codex Alimentarius — International Food Standards (2024) — Official source
FSA — Safer food, better business (HACCP) (2024) — Official source
BVL — Lebensmittelhygiene (HACCP) (2024) — Official source

Food Standards Agency (FSA) — https://www.food.gov.uk

The HACCP standards shown in this application are for informational purposes only. KitchenNmbrs does not guarantee that displayed values are current or complete. Always consult the FSA or your local authority for the latest regulations.

Written by

Jeffrey Smit

Founder & CEO of KitchenNmbrs

Jeffrey Smit built KitchenNmbrs from 8 years of hands-on experience as kitchen manager at 1NUL8 Group in Rotterdam. His mission: give every restaurant owner control over food cost.

8 years kitchen manager at 1NUL8 Group Rotterdam

Expertise: food cost management HACCP kitchen management restaurant operations food safety compliance

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