Properly calculating your true labor cost per hour means including every expense that goes into managing your staff - including HR software subscriptions. Most restaurant owners underestimate their real labor costs by forgetting these hidden expenses. Here's how to factor HR management system costs into your hourly calculations.
What are HR management costs?
HR management systems handle scheduling, leave tracking, contracts, and payroll processing. Your total investment breaks down into:
- Monthly subscriptions: €20-150 depending on team size
- Setup fees: one-time €200-1000 for installation and training
- Your time investment: hours spent on data entry and system management
💡 Example:
Restaurant with 8 staff members using HR software:
- Subscription: €89 per month
- Setup costs: €400 one-time
- Management: 2 hours per week at €25/hour
Monthly costs: €89 + (8 hours × €25) = €289
How do you factor HR costs into labor cost?
Your HR expenses become part of your total labor overhead. Add all HR-related costs and divide by your total worked hours.
Formula:
Labor cost per hour = (Gross wages + Employer contributions + HR costs) / Total worked hours
💡 Calculation example:
Monthly figures for restaurant:
- Gross wages: €18,000
- Employer contributions: €4,500 (25%)
- HR software: €289
- Worked hours: 1,200
Labor cost per hour: (€18,000 + €4,500 + €289) / 1,200 = €18.99
Without HR software this would be €18.75 - a difference of €0.24 per hour.
When does HR software pay for itself?
HR automation saves administrative time. If you're spending over 10 hours monthly on scheduling, leave tracking, and payroll prep, the software likely pays for itself.
Most kitchen managers discover too late that they've been undercharging for catering jobs because they forgot to include these overhead costs in their hourly rates.
⚠️ Note:
Always include HR costs in your hourly rates for catering or external jobs. Otherwise you'll underprice these assignments.
Impact on your P&L
HR costs appear under 'Personnel costs' or 'General expenses' in your profit and loss statement. They increase total labor costs but can boost productivity.
- Direct costs: subscription and setup fees
- Indirect savings: reduced admin time
- Risk reduction: fewer payroll mistakes
💡 Break-even calculation:
HR software costs €289 per month. Your time is worth €25/hour:
Break-even point: €289 ÷ €25 = 11.6 hours of saved time per month
That's under 3 hours weekly - realistic for most restaurants.
How do you monitor ROI?
Track your personnel admin time before and after implementing the system. Measure over 3 months for accurate data.
Food cost calculators help you factor total labor costs (including HR tools) into dish pricing, so you see each menu item's true personnel expense.
How do you calculate HR costs in your labor cost? (step by step)
Inventory all HR-related costs
Add up: monthly subscription, one-time implementation costs (spread over 12 months), and the time you spend managing the system (hours × your own hourly rate).
Calculate your total labor costs per month
Sum gross wages + employer contributions + all HR costs. Divide this by the total number of hours worked by all your staff to get your actual labor cost per hour.
Update your cost price calculations
Use your new labor cost per hour in all recipes and cost price calculations. Adjust your menu prices if needed to maintain your desired margin.
✨ Pro tip
Track your admin time for exactly 8 weeks before buying any HR software - multiply those hours by €25 to find your maximum monthly budget. Most owners overestimate their time savings by 40%.
Calculate this yourself?
In the KitchenNmbrs app you can do this in just a few clicks. 7 days free, no credit card.
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Frequently asked questions
Should I include HR software costs in my food cost calculation?
No, HR costs belong in your labor costs, not food costs. But they do increase your total cost per dish through higher labor cost per hour.
How do I spread one-time implementation costs?
Amortize one-time costs over at least 12 months. For €600 in setup fees, add €50 monthly to your HR costs for the first year.
When is HR software too expensive for my business?
If monthly costs exceed 15 hours of your time value, but you only spend under 10 hours monthly on personnel admin, it's probably overpriced for your needs.
How do I calculate the value of my own time?
Value your administrative time at minimum €20-30 per hour. As an owner, your time is worth more than staff minimum wage.
Should I pass HR costs through to catering prices?
Absolutely - all labor costs including HR tools must be included in external job rates. Otherwise you'll underprice these assignments and lose money.
Can I deduct HR software as a business expense?
Yes, HR software subscriptions and setup costs are typically deductible business expenses. Consult your accountant for specific tax treatment in your jurisdiction.
📚 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
- Warenwetbesluit Bereiding en behandeling van levensmiddelen (2024) — Official source
- WHO — Foodborne diseases estimates (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.
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