Most operators still “measure” labor when payroll hits the bank. The problem? Pay dates are arbitrary—they don’t line up with when service actually happened. That mismatch hides real staffing needs, dilutes productivity insights, and muddies profitability. If we care about labor productivity (not just labor percent), we have to measure labor where it lives: in hours worked by role, valued at a sensible average wage (plus burden), aligned to the period the work occurred—not the day checks cleared.
Below is the simple framework we use with restaurants and breweries to fix labor visibility and make better staffing decisions.
Why “pay-date labor” is flawed
Pay cycles (weekly, bi-weekly, semi-monthly) rarely end on the same day your P&L ends. When you book labor only on paycheck dates, some weeks or months will show too much 
labor (two payrolls posting) and some show too little (one payroll posting), even when staffing was steady. GAAP solves this with accruals—recognizing wages when the work is performed, not when cash moves—so your revenue and expense are matched in the same period. Restaurants that stay on a cash view of payroll get noisy P&Ls and choppy labor % trends that drive the wrong decisions.
Practical note: Many controllers accrue bi-weekly payroll at period-end and reverse it the next period, which smooths the timing and keeps labor aligned to the week or month it was earned.
The fix: book hours × average wage by labor category
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Track hours by role, not just dollars by pay date. At minimum:
• Front of House (FOH) • Back of House (BOH) • Brewery/Production • Management • Indirect/Support -
Value those hours using a current average wage per role (and add a payroll burden % for taxes/benefits if you want an all-in view). This creates an accrual for the period even before payroll posts, giving you clean weekly and period P&Ls. (Accruing wages at period-end is standard practice in accrual accounting.)
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Align your calendar to operations. Weekly P&Ls or a 4-4-5/13-period calendar make periods comparable (same number of weekdays/weekends and service shifts), so labor comparisons are apples-to-apples.
Why this matters for productivity, not just percentages
“Labor efficiency” (labor % of sales) rises and falls with price changes, promos, or a couple of big-spend parties. Productivity focuses on output per unit of labor—what you actually got from the hours you scheduled. Useful examples:
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Sales per Labor Hour (SPLH): Sales ÷ total labor hours in the same period.
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Covers per Labor Hour (CPLH): Covers ÷ total labor hours (often the better neutral productivity metric when checks vary).
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Earned vs. Actual Hours: Compare the hours “earned” by your sales or cover standard to the hours you scheduled/used.
All three require accurate hours per period; pay-date dollars won’t cut it.
Prime Cost (food + labor) is still the north-star controllable cost for restaurants, but it should be calculated using accrual labor, not pay-date labor, if you want a reliable weekly prime number.
A quick, repeatable workflow you can adopt this week
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Close each week (or 4-4-5 period) with finalized hours by role from your POS/timekeeping.
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Apply average wage & burden per role to those hours to book an estimated labor accrual for the period.
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Reverse the accrual the next period and true-up when payroll actually posts.
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Report productivity using CPLH/SPLH and earned vs. actual hours dashboards.
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Benchmark prime cost weekly—on an accrual basis—to catch drift fast.
What changes when you switch to hours-based labor?
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Cleaner trends: Labor % and prime cost stop “yo-yoing” because of payroll timing.
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Sharper staffing calls: Productivity metrics stabilize, so you can confidently trim 6–8 hours from slow shoulder windows without risking peak-hour service.
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Better pricing/margin work: Brewery COGS and restaurant gross margin become decision-grade instead of best-guess. (Direct labor correctly sits where it belongs.)
A simple example
Let’s say Week 46 shows 420 total hours: FOH 160, BOH 180, Brewery 40, Management 40. Average wages: FOH $13, BOH $18, Brewery $22, Mgmt $28. Add 10% burden.
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Accrued labor = (160×13 + 180×18 + 40×22 + 40×28) × 1.10 = $9,262 for Week 46.
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Now you can compute CPLH and SPLH using the same week’s sales/covers and compare to standards—no payroll timing noise.
(That accrual reverses next week when payroll posts; any difference is a small, clean true-up. This is exactly how accrual payroll keeps financials accurate.)
Tie-back to labor productivity (and why we prefer it)
In our prior labor-productivity post, we argued for staffing to protect average spend and guest experience rather than chasing a static labor %. Hours-based accrual accounting is the foundation that lets that philosophy work—you’re optimizing output per hour, not contorting schedules to make a pay-date labor % look pretty. (For more on productivity framing in hospitality—RevPASH and related measures—see Cornell’s research lineage.)
Bottom line
If your labor reporting is still anchored to pay dates, you’re making decisions on a funhouse mirror. Move to hours × average wage by role, accrue it to the week it happened, and manage to productivity metrics (CPLH/SPLH and earned vs. actual). You’ll get steadier prime cost, truer margins, and staffing that actually supports sales—without burning out your team.
