SPLH Definition, Formula, and How to Use It

If you own or manage a restaurant, you’ve probably heard the acronym SPLH and wondered what it means. These four letters stand for “sales per labor hour” (SPLH), one of the key performance metrics that help you effectively manage your restaurant’s business resources. Understanding SPLH can help you accurately balance staffing levels to meet customer demand and your profitability goals. In this article, I break down what SPLH is, how to calculate it, and how you can use SPLH to increase profitability.

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What Is Sales per Labor Hour

Sales per labor hour, commonly abbreviated as SPLH, is a metric that compares your total sales to the amount of labor required to produce those sales. It is a restaurant metric that dives deeper into your labor costs to give you a more immediate understanding of how much you spend on labor to earn each sales dollar.

Why SPLH Is Important

SPLH is important because labor is one of the very few costs you can control. Understanding SPLH will help you track and control labor costs through the day, week, month, and year, which can lead to better profit margins and a longer, more profitable life for your business. 

SPLH Formula

To figure sales per labor hour, you need a couple of numbers first: your total sales and total labor hours worked in the same timeframe. You can figure SPLH for whatever timeframe you like, per day, per week, per month, or per year. Just make sure your total sales and total labor hours figures are for the same timeframe before you begin calculating. 

Your total labor hours is the sum of all the hours worked by your hourly staff in a certain timeframe; it is not just the number of hours you are open. For example, if your restaurant operates for lunch and dinner, with a full staff of cooks, waiters, bartenders, bussers, and hosts, you’ll need to add all the hours your team worked in a day to get your total labor hours for that day. If you don’t use a POS (which provides this in your daily labor report), you can get this information from your time clock or payroll software. 

Once you have the baseline figures, the SPLH calculation is simple.

Total Sales $ ÷ Total Hours Worked = Sales per Labor Hour

Manual Versus Automated Tracking

If you use a point of sale (POS) system, you can easily pull the sales and labor numbers you need from the system’s sales and labor reports. A POS makes it faster and easier to calculate sales per labor hour, but you can still calculate SPLH if you track your operation manually. If you don’t use a POS, then hopefully, you maintain detailed nightly manager logs or spreadsheets that track your sales and labor for each day. If you do, you can pull the numbers you need from those logs. 

SPLH Example

Let’s figure out an SPLH calculation for a quick service cafe. To keep it simple, we’ll calculate the SPLH for a single day. The total sales for the day are $12,000.00. The day’s total labor hours break down like this:

Example Restaurant Daily Labor Hours

EmployeeHours Worked
Cook 18
Cook 28
Cook 38
Dishwasher8
Barista 15
Barista 25
Cashier 16
Cashier 26
Cashier 36
Cashier 46
Total Labor Hours:66

So, for this restaurant, the total labor hours are 66. And the daily SPLH looks like this: 

$12,000 ÷ 64 = $181.81

Is $181.81 a “good” SPLH? Well, that depends on the cafe’s total operating costs and whether they earn a profit overall. For most restaurants, an SPLH over $120 is considered excellent. 

What Is a Good SPLH? 

A good SPLH varies by restaurant. Every operation is different and has different overall costs. A good SPLH is one that allows your restaurant to turn a profit. 

There are some industry benchmarks for SPLH for different restaurant types, though. These industry standards can give you an idea of how your restaurant is performing compared to others like yours. 

Target Sales per Labor Hour by Restaurant Type

Restaurant TypeSPLH RangeInsights
Quick Service$100-$200Quick service restaurants (QSRs) tend to do a high sales volume with fewer support staff (bussers, runners, etc.), so their SPLH tends to be higher.
Fast Casual$100-$200Fast casual restaurants may have more staff members than QSRs (like prep and line cooks), so they tend to have a slightly lower average SPLH than quick service.
Full-service Casual$60-$100Full service restaurants (FSRs) need more support staff in both the kitchen and dining room than QSRs and have lower menu prices than fine dining. So $60 to $100 is still a great SPLH for them.
Full-service Fine Dining$90-$150Fine dining restaurants have armies of cook and service staff, but they can also charge a premium for their high-end experience, so their SPLH tends to be higher than casual FSRs.
Bar$150-$250The profit margins on liquor are very generous, and bars tend to see a high volume of business, which increases their SPLH.
Coffee Shop/Cafe$50-$100Coffee shops have a lower menu price point than other food businesses, and some may also have a kitchen staff to prepare light meals. But when you’re selling a craveable item like coffee, sales volumes tend to be high, leading to a healthy SPLH.

So, if your SPLH is outside these ranges, is your business in trouble? Not necessarily. A low SPLH might be fine if your business is earning a profit overall. And a higher SPLH can sometimes be an indication that you are understaffed. 

SPLH is only one metric. It can help you identify areas where you can be more efficient and drive more profit. However, it is not a standalone number; you need to consider your SPLH within the context of other restaurant metrics and KPIs to create a holistic picture of your business before you make any major strategy changes. 

Applying SPLH to Your Restaurant

Now you have your SPLH calculated, and you have some idea whether your SPLH is healthy based on industry benchmarks. There are many ways that SPLH can inform your restaurant management decisions; these are some of the best ones. 

Set a Target SPLH

Using your restaurant’s historical sales and labor data alongside industry-standard benchmarks, figure out a target SPLH for your restaurant. Your target SPLH should be a reasonable number that allows your restaurant to earn a healthy profit without causing understaffing. Understaffing, even for a short time, can result in poor customer service, which can lower your sales, causing more long-term problems. So make sure your target SPLH doesn’t cut too many labor hours from your schedule. 

Calculate your SPLH daily, and compare it to this target. This will give you a deeper understanding of how your business ebbs and flows and how those patterns affect your labor needs and profitability. If you’re not sure where to begin, start by figuring out your actual SPLH and set a goal to increase it by 10% over the next three months. 

Use SPLH to Create Labor Budgets

The most common way to apply your SPLH is when creating labor budgets. Consider your target SPLH alongside historical sales data and sales forecasts to set a budget before you write your staff schedule. 

For example, let’s say your target SPLH is $120, and historically, your sales on a Saturday night are $10,000. Then you know you can safely schedule around 80 labor hours ( or $10,000 ÷ $120 = 83.33) on a Saturday night without compromising your SPLH targets. 

Use SPLH for Labor Forecasting

Your SPLH can help you forecast how much labor you’ll need in the future. There are a couple of steps to this process. First, you use your historical sales data to predict your future sales for future weeks, months, or seasons. Then use your target SPLH to backtrack and figure out how many labor hours you can schedule in that timeframe to meet your goals. 

That calculation looks like this: 

Total Projected Sales $ ÷ Target SLPH = Total Labor Hours to Schedule

So, if you project a total sales of $15,000 for New Year’s Eve dinner service and your target SLPH is $120, then you can schedule 120 labor hours for that shift. This breaks down to about 15 people working eight-hour shifts, or 20 people working six-hour shifts. Doing the forecast in advance saves you a ton of time when writing schedules later in the year.

Make Real-time Service Adjustments

Once you get comfortable quickly calculating SPLH, you’ll be able to use it daily to make real-time cuts to your hourly staffing. For example, let’s say you are the manager on duty on a slower-than-usual Saturday night service. You pull a sales report that confirms sales are lower than expected. You can confidently start getting service staff off the clock to maintain your SPLH.

How to Improve SPLH

There are two main ways to influence your SPLH, increase sales or decrease labor. So, there are several concrete things you can do to impact your SPLH. 

Increase Sales

There are many ways to Increase your restaurant sales. These are just a few strategies to start things rolling in the right direction.

Whether you offer counter service or table service, the faster you serve customers, the more customers you can serve. More covers mean more sales, which leads to higher SPLH. Look for bottlenecks in your operation, like servers crowding into too few server stations to ring in orders, dishes with a lengthy prep or cook time, or cocktails that take too long to make. You may find that your menu is confusing, creating long tableside conversations before customers order. Look at all the possibilities, and find ways to pick up speed where you can.

If your prices are too low, your SPLH will be low. Look closely at the costs to create each dish and the prices at competing restaurants that serve the same item. Make sure your food costs are in line, and you have built in a healthy profit margin on each dish. If you are underpricing your menu, your SLPH will always look low.

Sometimes sales—and thereby your SPLH—are low because your servers, hosts, bartenders, or cashiers are not equipped to quickly upsell and cross-sell items on your menu. Especially if your staff are new to the industry, they can feel like upselling and cross-selling are pushy or rude. Work them to ensure everyone understands how your menu items or other services (like catering, takeout, and loyalty programs) can work together to improve customers’ experience. 

Role-play common tableside conversations with newer staff so their recommendations become seamless. Ask top-selling servers to offer suggestions on upselling and cross-selling during team meetings. Offer incentives like a small commission, priority scheduling, or the chance to first cut to staff who sell catering packages or drive reservations for special events. Celebrate any progress with your whole team.

Reduce Labor Costs

When you hear “reduce labor costs” you might think that means “cut employee hours.” There are other ways to reduce labor costs than cutting employees or cutting their hours. Consider more precise moves like these:

Look at your business traffic. Your customers likely don’t all arrive at the same time, and your staff shouldn’t either. Pin your employee clock-in times to the times your business is busiest to ensure you have coverage in the kitchen and front of house when you need it to speed service and grow sales. Staggering clock in times reduces the likelihood that you’ll send employees into overtime or incur break penalties, which further reduces your labor costs.

There have never been more restaurant-specific tech solutions available to help with all sorts of tasks. From automated voice assistants and chatbots to answer common customer questions on your phones, social media profiles, and email. Most POS systems support self-service kiosks for ordering or QR code ordering. You might speed order placement by adding a few tableside order and payment devices. Or, there are always restaurant robots for running and bussing food. 

This tech doesn’t necessarily replace employees; restaurants are still a human business, after all. But smart tech can reduce the number of hours you need hourly staff by filling in the gaps during typically slow times in your business.

SPLH Pros and Cons

SPLH is a revealing metric that illustrates how well you are managing controllable labor costs. It is a favorite metric of many restaurant managers. But it is only one metric and there are pros and cons to using it. 

Pros:

  • Deepens operational understanding: SPLH and metrics like it give you a deep understanding of how all the pieces fit together. 
  • Helps with scheduling: SPLH helps you set and stick to labor budgets and removes any doubts about whether you have enough staff. 
  • Illustrates seasonal changes: SPLH shows patterns like seasonal dips in sales and spikes in labor need so you can plan ahead. 
  • Provides focus when change is needed: SPLH helps you focus on making specific, surgical changes to your operation to shift your sales and costs in the right direction. It can provide clarity when managing a business full of variables. 
  • Informs real-time decision-making: You can figure SPLH at times when you need to make in-the-moment staffing decisions, like when to cut staff for the day.

Cons:

  • Tunnel-vision: SPLH can give you confidence in decision-making, and it can be easy to focus on it and ignore other metrics that might complicate your decision-making. 
  • Stress: Focusing on metrics can lead to a lot of stress about numbers, especially if your business is struggling. 
  • Potential for understaffing: Cutting staff hours is one of the fastest ways to impact your SPLH, and impacting your SPLH feels great. But it can quickly lead to understaffing, which will eventually tank your sales, and set your business in a spiral. 
  • Can be misinterpreted if sales are low: If your sales are low, your SPLH might lead you to think that overstaffing is your issue. You need other metrics like food cost, check average, and more to give you a more nuanced view. 
  • Over-emphasis on short-term gains: Dramatic shifts like massive menu price increases or scheduling cuts will boost your SPLH in the short term, but could have negative consequences long-term. It is important to keep your eye on long-term profitability and aim for incremental SPLH gains.

Restaurant SPLH Best Practices

Restaurant metrics are a great way to get a real-time picture of your restaurant and make operational changes at a point when it can actually make an impact on your operation. Mastering metrics can feel like a superpower. And it kind of is, so it can be easy to get carried away. There are some best practices to keep in mind.

  • Take a balanced approach: SPLH is just one of a slew of metrics that measure your restaurant performance. Take some time to get comfortable with the numbers and consider your SPLH figures alongside other metrics to help you determine a measured way forward. 
  • Monitor employee morale: Managing people is one of the more stressful parts of operating a restaurant. Metrics can make staff feel like they are under a microscope, leading to stress and burnout. Keep an eye on your employees’ state of mind and maintain an open door for feedback. That may sound like a lot of work. But remember, your staff are the people who show up every day and keep your business running. 
  • Focus on long-term, incremental change: It can be tempting to make big changes to see how quickly you can impact your SPLH. This is a recipe for stress for both you and your staff. If you focus on long-term change, then any incremental shift in the right direction will feel like a win.

SPLH FAQs

Addressing these common SPLH questions can help restaurant owners and managers better understand how to use this metric to grow profits and measure the health of their operations.

No, you should not include salaried staff in your SPLH calculation. Your SPLH is about how well you are managing your controllable labor costs, and salaries are fixed labor costs. So, including salaried hours will throw off your calculation. There are other metrics (like overhead rate) that measure whether you are efficiently managing how much you pay in salaries.

No, you should not include tax in your sales figures when calculating SPLH. The idea is to get a sense of your total actual sales, not pad the number with taxes to make the number look better (tempting as that might be). When it comes to discounts and voids—that’s up to you, depending on what you hope to learn from your SPLH.

If, for example, you are running a large promotion like a two-for-one deal or a Groupon, it can help to figure your SPLH both ways, with your sales figures before discounts were applied and after. That can help you determine if you are overstaffed or if the discounts themselves are cutting into your SPLH.

You can track SPLH every day, for each day part (lunch, happy hour, dinner, etc.), depending on what you hope to learn. Most restaurants find it useful to figure out SPLH weekly and discuss the results during their weekly management meetings. The downloadable calculator above includes sheets for calculating your daily, weekly, and monthly SPLH.

SPLH directly affects profitability by helping your restaurant control labor costs. The higher your sales per labor hour, the more sales you are making for every labor dollar you spend.

Last Bite

Tracking SPLH can give you confidence when making labor scheduling decisions in your restaurant. Consistently monitoring SPLH will help you fine-tune your operation to reduce wasted time and increase sales. Remember to consider this metric alongside complementary performance indicators like your food cost and check the average before you make major strategy moves. SPLH is a revealing metric, but it is only one number.

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