If you budget labor with headline hourly pay only, your menu math is already off. In U.S. operations, employer payroll taxes, tip-credit compliance risk, and state-level wage rules can change your true hourly cost faster than most owners expect.
This guide gives you a practical way to convert scheduled wages into loaded labor cost for pricing, staffing, and weekly control.
Quick Summary
- Loaded labor cost = base wage + employer payroll add-ons + local on-costs.
- Federal floor is still $7.25/hour, but many markets operate far above it.
- Employer FICA is 7.65%; FUTA is usually 0.6% after full credit on the first $7,000 of wages.
- Price by labor minutes per dish, not by wage rate alone.
2026 Federal Baseline (Checked)
As of 2026-02-12, federal references indicate:
- Federal minimum wage: $7.25/hour.
- Federal tipped cash wage: $2.13/hour, with a maximum federal tip credit of $5.12/hour.
- Employer FICA: 7.65% (6.2% Social Security + 1.45% Medicare).
- FUTA: 6.0% statutory rate, usually 0.6% with full state credit, on the first $7,000 paid to each employee.
The U.S. Department of Labor state wage page notes many rates effective on 2026-01-01, which is why monthly updates are safer than quarterly guesswork.
What You Need Before You Calculate
- Base hourly wage by role (line cook, cashier, prep, server, shift lead).
- State and local minimum wage rules for each location.
- Payroll assumptions: FICA, FUTA, state UI, and employer-paid benefits.
- Actual labor minutes per top-selling menu item.
Core Formula (Hourly Role)
Loaded hourly cost = Base wage x (1 + FICA + FUTA + state UI + other on-costs)If your business contributes benefits, add them as a per-hour amount after the multiplier.
Example: $15.00/Hour Line Cook
Assumptions:
- Base wage: $15.00
- FICA: 7.65%
- FUTA: 0.6%
- State UI: 0% (replace with your actual state rate)
Loaded hourly cost = 15.00 x (1 + 0.0765 + 0.006)
= $16.24/hourAt 35 hours per week:
$16.24 x 35 = $568.31/weekExample: Tipped Server (Federal Baseline)
Federal rules allow a tipped cash wage, but total pay must still satisfy legal minimum pay requirements. Use this only as a baseline model and validate your state rules first.
- Cash wage: $2.13/hour
- FICA: 7.65%
- FUTA: 0.6%
Loaded hourly cash cost = 2.13 x (1 + 0.0765 + 0.006)
= $2.30/hourIf your tip flow is volatile, budget closer to full local minimum wage for pricing decisions.
Local Scenario: Downtown vs Suburban Store
Using the same menu across locations often fails because loaded labor is location-specific.
- Downtown lunch-heavy site: high wage pressure, compressed rush windows, more peak-hour staffing.
- Suburban neighborhood site: lower rush intensity, fewer peak overlaps, different labor-minute profile.
Even with identical food cost, labor per dish can differ enough to require different price floors or bundle design.
Convert Loaded Labor Into Menu Pricing
Labor cost per dish = Loaded hourly cost ÷ 60 x Labor minutesExample:
- Loaded hourly cost: $16.24
- Labor minutes per dish: 10
$16.24 ÷ 60 x 10 = $2.71 labor cost per dishAdd this value to ingredient and channel costs before setting price.
Prime-Cost Connection
Prime cost is food + labor. If your prime-cost target is 60% and your food-cost target is 30%, labor must generally stay around 30%.
Target labor % = Target prime cost % - Target food cost %This is the fastest way to decide whether your problem is pricing, scheduling, or both.
Weekly and Monthly Routine
Weekly:
- Compare scheduled hours vs actual hours by top 5 roles.
- Check overtime creep by service window (lunch, dinner, late-night).
- Spot-check labor minutes for top-selling items.
Monthly:
- Recalculate loaded hourly cost for each role and location.
- Refresh state UI assumptions.
- Flag menu items where food + labor exceeds control target.
- Adjust staffing model or item price, then recheck at day 14.
Common Mistakes
- Building prices from base wage only.
- Using one labor model for all locations.
- Applying tipped wage assumptions to non-tipped workflows.
- Ignoring labor minutes and pricing from food cost only.
Related Guides
- US Restaurant Menu Pricing Guide
- US Menu Pricing Calculator
- US Food Cost Calculator
- US Service Charge vs Tip Guide
- Restaurant Labor Cost Percentage Guide
- Prime Cost Guide
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