Labour cost ratio
Labour cost ratio is the total employer cost of staff for a store, branch or chain as a share of its net sales excluding VAT for the same period.
Also calledlabour cost percentage, wage cost ratio, personel maliyeti oranı
Formula
Total labour cost ÷ Net sales × 100- Total labour cost
- Gross pay, employer contributions to SGK (Turkey's Social Security Institution) and other statutory costs, meals, travel, bonuses, overtime; outsourced staff added on a separate line.
- Net sales
- Sales for the same period, excluding VAT and net of returns.
Calculator
Enter your own figures and the result updates instantly. The defaults are the figures from the worked example below.
Result%14
Worked example
How to read it, and what good looks like
The ratio is reported in two ways and the two must not be mixed. A share of sales says how much of every TRY 100 of sales goes to staff. A share of total costs describes how the cost base is split; because its denominator is total costs, in a profitable business it comes out higher than the share of sales. Cost breakdown tables in company presentations give this second measure, and it cannot be compared with the formula on this page.
"What should labour cost be?" follows from the cost structure: Labour ceiling = Gross margin − Rent ratio − Other cost ratio − Target operating profit. Because labour cost is largely a fixed headcount, the ratio rises when sales fall even though nothing changed on the rota. Read the monthly ratio alongside sales per labour hour; the hourly measure shows whether the problem is the size of the team or how its hours are spread across the day.
Track the ratio monthly and the rota weekly; in a store above its ceiling, compare the hour-by-hour rota with peak trading hours first. In Mindpera, Mind Ops monitors costs across all stores and flags lines that move out of pattern; when a drop in conversion lines up with the rota, it opens a rota review task for the regional manager. Where payroll sits in the HR system and sales in the POS, installation joins them at store and day level.
Where it misleads
- Only gross pay from the payroll is counted; employer contributions, meals, travel and bonuses are left out and the ratio looks lower than it is.
- Security, cleaning and temporary staff sit in another cost account; a store using contractors looks more productive than one with its own team.
- Staff share of total costs is read as a share of sales; a 35% cost share is mistaken for 35% of sales.
Data you need
- Payroll: gross pay, employer social security contributions, overtime, bonuses
- Benefit costs: meals, travel
- Contractor and temporary staff invoices
- Net sales and hours worked by store
Mindpera products that calculate this KPI
Mind Ops
Run audits and performance across your grocery branches from one place, with a set of more than 100 KPIs. Audits, reporting and camera event tracking meet on the same screen.
Mind Cost
The cost of what you buy for the shelf and the cost of what your bakery, deli and kitchen produce are calculated on the same model; in both, where the gap comes from is visible line by line.
Frequently asked questions
- What should labour cost ratio be?
- Work it back from the cost structure: Labour ceiling = Gross margin − Rent ratio − Other cost ratio − Target operating profit. With a 50% margin, 12% rent, 16% other costs and an 8% profit target, the ceiling is 14%. Format differences are structural: according to the 2025 employment report of TPF (the Turkish Retailers Federation), local chains employ 13-20 people per store and national discount chains 2-3, so set targets separately by format and branch type.
- What goes into labour cost?
- Count the total cost to the employer: gross pay, employer social security and other statutory costs, overtime, bonuses, meal and travel allowances. Add outsourced security, cleaning and temporary staff on a separate line. A ratio built on payroll gross pay alone comes out low, and stores with their own team cannot be compared with stores using contractors.
- What is the difference between labour's share of costs and its share of sales?
- Share of sales shows how much of every TRY 100 of sales goes to staff. Share of costs shows how total costs are split. If staff make up 35% of total costs, that does not mean 35% of sales. To compare the two you also need total costs as a share of sales.