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  • Writer's pictureAndrae Gaeth

Getting to grips with wage costs

One of hospoIQ’s key outcomes is to enable hospitality businesses to be strategically managed to generate an ongoing profit, despite curveballs such as the increase in the minimum wage. It achieves this through setting the gold standard for providing users with analytics and reporting features that allow assessment of past, present and future wage costs versus sales.

“Information is power”

Information is power, and it is vital to know accurately what both the sales and wage costs of your business are so that you can accurately align your rostering to operate as efficiently and effectively as possible. Read on for a breakdown on how hospoIQ can help you to achieve this.

Wage costs

Wage costs are the total cost of paying your employees for their time including any bonuses or benefits. Of course, these costs must be met by the money you make from sales or services. The wage percentage is your wage costs as a proportion of these sales, and it is this ratio that should be consistently kept in check to maintain profits and business growth.

Adapting to increasing wage costs to maintain the wage percentage

The ‘rule of thumb’ wage costs in hospitality is 20 - 30% (depending on different factors such as day of the week, etc.) and should be kept or improved for continued profitability. As with any equation, if one side increases, the other must decrease to maintain equality. Therefore, to maintain profits with increased wage costs, either pricing must increase, or cost-cutting must occur in other areas. One area to consider is efficient rostering practices : specifically, the distribution of staff so that more staff are working during peak times and less staff when sales are down. This not only aligns wage costs with sales but also facilitates a more efficient and satisfactory customer experience. Let’s look at how hospoIQ assists in this area:

1. Prediction of wage costs against sales: this is done by integrating with clock-in and out times and rosters from your POS or rostering system. hospoIQ aims to be a fully ‘agnostic’ solution, sitting on top of whatever systems you already have in place. The derived wage costs are then compared to sales for common periods (e.g., today, this week) to facilitate review and prediction of wage costs for the future.

2. Distinguishing between departments: hospoIQ allows you to categorise your staff by department, allowing more accurate wage cost comparisons in specific departments with the sales for different areas of your business. For example, the Kitchen staff can be distinguished from the Front of House (FOH) staff, so that their wage costs are compared exclusively to food sales, whereas FOH wage costs are compared to total sales (including bar sales). This is important because, for example, if you found the business had more bar sales than food sales during a specific period, then rostering could be aligned to this prediction (i.e., requiring more FOH staff and no additional Kitchen staff) so that the wage cost percentage is kept low and profits are optimised.


Perhaps the most compelling and user-friendly feature of hospoIQ is the dashboards (viewable either on your mobile phone or through a PC browser) that allow for an accurate, birds-eye view of wage costs and sales for specific time periods at any given moment.

Daily dashboards:

These include dashboards for both Today and Yesterday and can portray an hour-by-hour breakdown of wage costs and sales. Yesterday provides actual data, while Today shows a combination of actual and projected information. Today’s dashboard also provides actual sales and wage costs in real-time to help with immediate decisions to optimise staffing. The hourly breakdowns provide valuable intel into specific periods where labour and sales are mismatched, requiring revision to achieve the target wage costs percentage.

Weekly dashboards:

These dashboards incorporate data from last week and projected values for this week and next week. This makes it easy to compare week to week to ensure the staff management is still on track to achieve the target wage cost percentage. Utilising the projections (which employ ‘machine learning’ algorithms over historical data), it’s possible to pre-empt imbalances in rostered staff to projected sales so that strategic staffing decisions can be made.

Here is an example of this week’s dashboard:

We can see clear pie charts that depict what sales were made, what discounts were given and how accounts were paid. We can also see very quickly what our total actual values (sales and discounts) and our total projected values (sales and target) are, and how these all interact on a day-by-day basis to influence the KPI which is our wage cost percentage. This shows projected sales for each day of the week, actual sales as they occur, the difference between the two and finally the resultant, changing wage cost percentage (or KPI). It is then possible to precisely ascertain on what days the sales were quite a way off the target so that we start to problem-solve, identify root causes and put measures in place to re-establish the goal wage cost percentage.


Additional reporting provides the ability to filter/slice/dice information on sales versus wage costs. Below is an example. It’s possible to filter for the site, location and department being analysed. There is also a clear comparison made between last week’s wage costs and this week’s, motivating staff to strive for continuously better results. The information provided compares the actual sales, wage costs and resultant wage cost percentages for last week and the projected values for this week and next week.


hospoIQ has been designed to accurately and simply summarise the data for your business regarding sales, rostering, how they align and how they compare to recent historical data. The aim is to provide a more informative platform on which to base staffing decisions to reduce the wage cost percentage while maintaining customer satisfaction and improving profits.

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