Labor costs typically consume 25-35% of restaurant revenue, yet 70% of new restaurant owners underestimate their true staffing expenses. Most entrepreneurs calculate gross salaries but completely forget about the mandatory social contributions that pile on top. This guide shows you how to calculate your actual labor costs including every required addition.
What are social contributions?
Social contributions are mandatory costs you pay as an employer on top of your staff's gross salary. These consist of:
- Employer contributions: premiums for state pension, unemployment insurance, disability insurance and other insurances
- Holiday pay: minimum 8% of gross annual salary
- Pension premium: often 15-25% of gross salary (employer usually pays 2/3)
- Health insurance: employer contribution (not mandatory but often provided)
⚠️ Note:
The exact percentages vary by collective labor agreement and change annually. Always check the current rates with the tax authority or your accountant.
Calculating employer contributions
In the Netherlands you'll pay roughly 25-30% social contributions on top of gross salary as an employer. This breaks down into several components:
- Employee insurances: 8-10% (unemployment, disability, work-related injury insurance)
- Social insurances: 18-20% (state pension, survivor benefits, long-term care)
- Income-dependent health insurance contribution: 6.75%
💡 Example employer contributions:
Chef with gross salary €2,500 per month:
- Gross salary: €2,500
- Employer contributions (28%): €700
- Holiday pay (8%): €200
Total monthly costs: €3,400
Holiday pay and other additions
Beyond social contributions come other mandatory expenses:
- Holiday pay: minimum 8% of gross annual salary (paid in May/June)
- 13th month: not legally required, but often included in collective labor agreements
- Pension accrual: employer share usually 10-15% of gross salary
- Travel allowance: not required but often provided
💡 Example total labor costs:
Waitress with gross salary €2,200 per month:
- Gross salary: €2,200
- Employer contributions (28%): €616
- Holiday pay (8%): €176
- Pension premium employer (10%): €220
Total monthly costs: €3,212
Hospitality Collective Labor Agreement and specific rules
The hospitality industry operates under its own collective labor agreement with specific wage and working condition requirements:
- Hospitality minimum wage: often slightly higher than statutory minimum
- Irregular shift allowance: extra compensation for evening/weekend/holiday work
- Tip arrangement: agreements on tip distribution
- Training allowance: contribution to industry-specific training
⚠️ Note:
Always verify if you fall under the Hospitality Collective Labor Agreement. Some restaurants have their own agreement or follow different regulations.
Calculation for your opening
For your opening you need to estimate staffing requirements and their true costs. Calculate with the actual expenses, not just gross salary - the kind of thing you only learn after closing your first month at a loss.
💡 Example staffing for small restaurant:
Team for 40 covers per evening:
- 1 chef (€2,800 gross): €3,920 total
- 1 sous-chef (€2,400 gross): €3,360 total
- 2 waitresses (€2,200 gross): €6,160 total
- 1 dishwasher part-time (€1,400 gross): €1,960 total
Total monthly labor costs: €15,400
Labor costs as percentage of revenue
In hospitality, labor costs typically run 25-35% of revenue. This percentage depends on:
- Type of restaurant: fine dining requires more staff per guest
- Service level: table service vs. self-service
- Opening hours: more hours = more staff needed
- Seasonality: fluctuations in occupancy
If your labor costs exceed 35%, profitability becomes challenging. Below 25% is often unrealistic for full table service.
How do you calculate labor costs including social contributions?
Determine your staffing needs
Make an overview of all positions you need: kitchen, service, management. Calculate how many hours per week each position needs to work based on your expected occupancy.
Calculate gross salaries
Look up the collective labor agreement wages for each position. Add up the hours for part-time staff. Don't forget to account for vacation days and sick leave (calculate with 10% extra).
Add social contributions
Multiply each gross salary by 1.40 (40% markup for employer contributions, holiday pay and pension premium). This gives you the actual monthly costs per employee.
Check the percentage of revenue
Divide your total labor costs by your expected monthly revenue. If this exceeds 35%, you need to look at whether you can work more efficiently or need to charge higher prices.
✨ Pro tip
Add an extra 15% buffer to your calculated monthly labor costs for the first 4 months to handle sick leave coverage and unexpected rush periods. Most owners forget these inevitable staffing gaps.
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
Can I start with only family and friends to save on labor costs?
You can, but you must still officially employ family members and pay them proper wages. Undeclared work is illegal and you'll face steep fines during inspections. Always calculate with market-rate wages.
What does it cost to employ someone?
Calculate roughly 40% on top of the gross salary for social contributions and additions. A chef earning €2,500 gross will cost you €3,500 per month in total labor expenses.
Do I need to give everyone a permanent contract right away?
No, you can start with temporary contracts or on-call staff for flexibility during opening. However, you must still pay all social contributions for them.
What about tips and labor costs?
Tips are extra on top of wages, never a replacement. You must always pay the collective labor agreement minimum wage, regardless of tip income.
📚 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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