Recruitment and selection costs you an average of 15-25% of a new employee's annual salary. Most hospitality entrepreneurs overlook these expenses in their personnel budget, leading to underestimated labor costs. Here's how to properly incorporate recruitment expenses into your annual labor calculations.
What are recruitment and selection costs?
Recruitment and selection costs encompass every expense you face while finding, selecting, and onboarding new team members. These costs extend far beyond simply posting a job listing.
- Job posting (websites, social media, temp agencies)
- Management time for job interviews
- Trial shifts and training for new employees
- Administrative costs (contracts, registrations)
- Work clothing and equipment
Calculate your total recruitment costs per year
Start by tallying every expense you incur annually for hiring staff. Don't forget the hidden costs that add up quickly.
💡 Example:
Restaurant with 8 employees, 3 new hires per year:
- Online job postings: €450
- Temp agency: €1.200
- Management time (30 hours × €25): €750
- Trial shifts (3 × €150): €450
- Work clothing: €300
Total recruitment costs: €3.150 per year
Distribute recruitment costs across your total payroll
You'll spread these recruitment expenses across your entire annual payroll. This creates a percentage that gets added to each employee's true cost.
Formula: Recruitment cost % = (Total recruitment costs / Total payroll) × 100
💡 Example calculation:
Total recruitment costs: €3.150
Total annual payroll: €180.000
Recruitment costs: (€3.150 / €180.000) × 100 = 1.75%
Add recruitment costs to your labor cost per dish
After managing kitchen operations for nearly a decade, I've seen how these seemingly small percentages impact overall profitability. Once you've determined what percentage of your payroll goes toward recruitment, incorporate this into your labor cost calculations.
- Calculate your standard labor cost per dish
- Add the recruitment percentage to it
- Use this new percentage for your cost price
💡 Practical example:
Dish with 15 minutes preparation time, chef earns €18/hour:
- Base labor cost: (15/60) × €18 = €4.50
- Recruitment costs: €4.50 × 1.75% = €0.08
- Total labor cost: €4.50 + €0.08 = €4.58
Account for staff turnover
Higher staff turnover directly translates to increased recruitment expenses. Hospitality often sees 30-50% annual turnover, meaning you're constantly recruiting new talent.
⚠️ Note:
Seasonal staff require proportionally higher recruitment investments since you replace them more frequently. For seasonal personnel, factor in 1.5× to 2× the standard recruitment costs.
Update your calculation annually
Recruitment expenses fluctuate dramatically year to year. Labor shortages drive costs up, while economic downturns can reduce them significantly.
- Keep track of what you actually spend on recruitment
- Update your percentage each year
- Pay extra attention during labor shortages
Tools like KitchenNmbrs let you monitor labor costs per dish and make quick adjustments when recruitment expenses shift.
How do you calculate recruitment costs in your labor costs?
Collect all recruitment expenses from the past year
Add up: job posting costs, temp agency costs, time for interviews, trial shifts, work clothing, and administration. Don't forget hidden costs like your own time spent on job interviews.
Calculate the percentage of your total payroll
Divide your total recruitment costs by your annual payroll and multiply by 100. This gives you the percentage you need to add to each labor cost calculation.
Adjust your cost price calculation
Add the recruitment percentage to your existing labor cost per dish. Update this percentage annually based on your actual recruitment expenses and staff turnover.
✨ Pro tip
Track your recruitment spending monthly rather than annually - this gives you a 3-month rolling average to adjust your labor cost percentage mid-season. Most restaurants underestimate by 20-30% when they only calculate once yearly.
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
How do I calculate the cost of my own time for job interviews?
Use your hourly rate as an entrepreneur, typically €25-40 per hour. Add up all hours spent on interviews, assessing trial shifts, and administration related to new hires.
Are temp agency costs also recruitment costs?
Yes, all costs you incur to find staff count as recruitment costs. Temp agencies, recruitment agencies, headhunters - anything you pay to get new employees falls under recruitment costs.
Should I include onboarding periods in recruitment costs?
Absolutely. The time experienced employees spend training new hires represents a real recruitment expense. Calculate using the trainer's hourly rate multiplied by training hours spent on new employees.
📚 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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