Elevated labor costs had a significant impact on restaurant profitability in 2024

Successfully managing the prime costs of food and labor is key to a restaurant’s ability to turn a profit. While labor-cost ratios ran well above historical averages for most restaurants last year, operators who let them get too far out of line were much more likely to find themselves in the red. 

That’s one of the findings from the 2025 edition of the National Restaurant Association’s Restaurant Operations Data Abstract, which was released in August. The Abstract is based on financial and operating data provided by more than 900 restaurant operators nationwide. 

Among fullservice respondents to the survey, salaries and wages (including benefits) represented a median of 36.5% of sales in 2024. For fullservice operators who reported a pre-tax profit in 2024, labor costs were a median of 34.2% of sales – or more than 2 percentage points lower.

In contrast, fullservice respondents who reported a loss saw their labor costs take up a much larger chunk of every sales dollar. For these operators, salaries and wages (including benefits) represented a median of 42.9% of sales – or more than 6 percentage points above the reading for all fullservice respondents. 

The story was similar in the limited-service segment, though the differences were not as dramatic. Among all limited-service respondents to the survey, salaries and wages (including benefits) represented a median of 31.7% of sales in 2024. 

Labor costs represented a median of 30.0% of sales among limited-service operators who reported a pre-tax profit in 2024, and a median of 34.1% of sales for limited-service operators who reported a loss.  

In addition to labor costs, the Abstract contains data for several other cost categories, such as food, occupancy, utilities, marketing and more. Additionally, the data is presented by various attributes, including average check size, annual sales volume, size of community and restaurant location.  

This information can help restaurant operators sharpen financial performance and identify cost categories where data could substantially vary by type of operation. By analyzing operating costs, restaurant operators may detect potential problems, determine how to manage costs, and become more efficient. 

The 2025 edition of the Restaurant Operations Data Abstract is available for purchase on the Association’s store.

Note: The data in the 2025 Restaurant Operations Data Abstract is not intended to represent standards or goals for individual restaurants, nor is the report an attempt by the National Restaurant Association to set or adjust industry prices or operating ratios. Rather, the data and related ‘Analyze Your Operation’ worksheet are intended to be used as management tools to help restaurant operators gauge their restaurant’s performance.