By month three, most restaurant owners realize their labor costs have spiraled beyond anything they budgeted. Staff expenses typically eat up 35-45% of total revenue, but first-year establishments often watch these percentages climb to 60-80% during those brutal opening months. Getting ahead of these numbers prevents the cash flow disasters that kill otherwise solid restaurant concepts.
What counts as staff costs?
Staff expenses stretch way beyond what you pay employees each week. You're dealing with a complete compensation package that includes:
- Gross salaries - what your employees earn
- Employer contributions - approximately 25-30% on top of gross salary
- Holiday pay - 8% of gross annual salary
- Pension premium - often 3-7% of gross salary
- Sick leave - average 4-6% of wage costs
- Training costs - for new employees and training
⚠️ Note:
Too many entrepreneurs calculate only gross salaries. Real costs run 35-40% higher due to mandatory contributions and additional expenses.
Average staff costs by restaurant type
Your labor expenses depend heavily on concept, location, and service style. First-year numbers often shock new owners:
💡 Example: Casual restaurant (60 seats)
Expected revenue first year: €400,000
- Kitchen team: €85,000 (chef, cook, prep cook)
- Service: €65,000 (2-3 employees)
- Owner/manager: €35,000
- Employer contributions (30%): €55,500
- Other costs: €15,000
Total first year: €255,500 (64% of revenue)
That percentage looks terrifying but reflects first-year reality. New restaurants generate lower revenue initially, which inflates labor cost percentages temporarily. A pattern we see repeatedly in restaurant financials shows this ratio improving significantly by month 9-12 as customer volume stabilizes.
Staff costs by position
Realistic compensation ranges in the Netherlands (including employer contributions):
- Head chef: €45,000 - €65,000 per year
- Cook: €32,000 - €42,000 per year
- Prep cook/kitchen assistant: €28,000 - €35,000 per year
- Server: €25,000 - €32,000 per year
- Barista/bartender: €28,000 - €38,000 per year
- Dishwasher: €24,000 - €28,000 per year
💡 Example: Minimum staffing bistro
For a bistro with 40 seats you need at minimum:
- 1 head chef (full-time): €55,000
- 1 cook (part-time): €25,000
- 2 servers (combined full-time): €58,000
- Yourself as owner: €30,000
Total: €168,000 per year (42% at €400,000 revenue)
How staff costs develop in the first year
Your labor expenses won't stay constant throughout year one. Expect this progression:
- Month 1-3: High costs, low revenue (60-80% of revenue)
- Month 4-8: Revenue grows, costs stabilize (45-55%)
- Month 9-12: Better ratio (35-45%)
Plan adequate cash reserves for those opening months. Most restaurants carry labor costs their revenue can't support during the first six months.
⚠️ Note:
Don't launch with excessive staff. Hiring remains easier than layoffs. Start lean and expand thoughtfully.
How to control your staff costs
Several strategies help manage labor expenses during your first year:
- Work yourself: As owner you can save €30,000-50,000
- Flexible contracts: Start with on-call staff and freelancers
- Smart scheduling: Avoid overstaffing through strategic planning
- Cross-trained staff: Employees who can work both kitchen and service
- Streamlined processes: Less manual work means fewer hours
💡 Example: Cost-saving strategy
Restaurant with smart approach:
- Owner works 50 hours/week: -€40,000
- 2 flexible staff instead of permanent contracts: -€15,000
- Efficient mise-en-place planning: -€8,000
Total savings: €63,000 first year
When investing more in staff makes sense
Sometimes higher labor investment pays dividends:
- Experienced chef: May cost €20,000 extra but reduces food waste significantly
- Quality service: Increases average check by 15-25%
- Stable team: Lower turnover means reduced training expenses
The key is balancing costs with quality to match your concept's positioning.
How do you calculate realistic staff costs? (step by step)
Determine your minimum staffing
Make a list of all positions you need: chef, cooks, service, dishwashing. Add up how many hours per week each position needs to work. Think about peak days and quiet moments.
Calculate gross salaries per position
Look up market-rate salaries for your region. Multiply hourly rate × hours per week × 52 weeks. Don't forget to include holiday pay (8%) and any bonuses.
Add employer contributions and other costs
Add 30-35% for employer contributions (social premiums, pension premium). Also include training costs, work clothing, and any sick leave. This gives you total staff costs per year.
✨ Pro tip
Set a target of reaching 40% labor costs by month 10 of operations. This 10-month timeline gives you breathing room while establishing a clear benchmark for operational efficiency.
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
What percentage of my revenue should staff costs be?
Established restaurants typically maintain 30-40% of revenue for labor costs. First-year operations often see 45-50% temporarily due to lower initial revenue. This ratio should improve as your customer base grows.
Should I count myself as owner in staff costs?
Always include a realistic owner salary in your calculations, regardless of what you actually take initially. This provides accurate cost projections and realistic profitability expectations for future planning.
Can I start with only freelancers?
You can use freelancers, but avoid sham self-employment issues. If someone works fixed hours, receives direct supervision, and performs regular duties, employment contracts are typically required. Consult an employment attorney for guidance.
How do seasonal fluctuations affect first-year staffing?
Seasonal restaurants face unique challenges with staff costs spiking during slow periods. Plan for 3-4 months of higher labor percentages and consider flexible scheduling or temporary layoffs during off-seasons.
What if my staff costs turn out too high?
First examine operational efficiency: combine tasks, streamline processes, or optimize scheduling. If improvements aren't sufficient, consider price adjustments or concept modifications to support your labor structure.
How much should I budget for employee turnover costs?
Budget 3-5% of total labor costs for turnover expenses including recruitment, training, and productivity loss. High-turnover positions like servers may require double this allocation during your first year.
📚 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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