Staffing costs are one of the biggest expenses for hospitality business owners. By striking the right balance between in-house employees and flexible workers, planning efficiently, and avoiding unnecessary expenses, you can keep control over your spending.
In this article, we dive into hospitality staffing costs, explore the ideal percentage relative to revenue—spoiler alert: 25% to 35%—and show how smart choices and a flexible approach can help you manage costs effectively.
Understanding staffing costs in hospitality
Workforce planning in hospitality is particularly challenging due to fluctuating demand and seasonal work. As a business owner or manager, you must be able to adapt quickly. Most hospitality businesses tackle this by maintaining a flexible workforce.
Beyond being a strategic choice for businesses, the ZEA survey from Statistics Netherlands (CBS) in 2023 revealed that around one-third of flexible workers in hospitality actively choose this working arrangement due to their need for flexibility.
There are various ways to structure this flexible workforce, such as hiring workers on zero-hour contracts, using agency workers, or engaging freelancers. Staffing costs vary depending on the type of worker. Below, we explain the differences.
Staffing costs of in-house employees
To build a flexible workforce, you can employ people on call or zero-hour contracts. Since these workers are on your payroll, the following costs apply:
- Gross salary: Makes up around 76% of total labour costs, including net wages, income tax, national insurance, and pension contributions.
- Mandatory additional labour costs: Covers holiday pay, social security contributions, pension premiums, and allowances, typically 23% of total labour costs.
Additional and indirect costs: Includes worker meals, uniforms, training, team events, bonuses, and sick leave, amounting to 3% to 10% of total labour costs.
In general, total costs exceed gross salary by an additional 20% to 40%.
According to CBS, the average labour cost in hospitality was €24.00 per hour in 2023.
Staffing costs of agency workers in hospitality
If you hire agency workers, you engage flexible staff through an employment agency. The cost consists of two components:
- The worker’s salary
- A multiplier (agency markup)
The multiplier ranges from 1.9 to 2.6 times the hourly wage and covers agency services such as recruitment, payroll, and HR administration.
Example of agency worker costs in hospitality
- Hourly wage = €15.50 (minimum wage in 2025)
- Multiplier = 2.3 (average agency markup)
- Total cost per hour = €35.64 (€15.50 × 2.3)
The multiplier covers:
- Recruitment & selection
- Holiday pay & annual leave
- Pension costs & social security
- Insurance
- Absence management, legal advice, payroll & HR administration
The exact inclusions vary by agency and sector, so always review the terms before signing a contract.
Costs of freelancers in hospitality
If you work with freelancers, you only pay their hourly rate. When hiring freelancers via Temper, a digital marketplace connecting businesses and freelancers, a small platform fee per worked hour applies.
In return, you get access to a large pool of motivated freelancers with verified reviews and real-time insights into planning, finances, and data. All freelancers on Temper are covered for liability, accidents, and sick leave.
Example: average freelance costs via Temper
- Freelancer hourly rate = €19.00
- Platform fee per hour = €3.90
- Total cost per hour = €22.90 (€19.00 + €3.90)
View more freelance rates for different industries here.
The ideal staffing cost percentage
Monitoring your staffing costs helps you make informed decisions and take action if expenses rise too high. One of the best ways to track this is through key performance indicators (KPIs).
How to calculate staffing costs using KPIs
KPIs allow you to compare your business performance with competitors and industry benchmarks. This helps identify areas for improvement and ensure financial stability.
- The total direct cost benchmark (which includes worker wages and product costs) averages around 60% in hospitality.
- By summing your product costs, you can determine the remaining budget for staffing costs.
- Another common method is expressing labour costs as a percentage of revenue. The industry benchmark is between 25% and 35%, though this may vary depending on your business model.
There are many ways to optimise expenses, but focusing on staffing efficiency is key.
Expanding your core team with a flexible workers is already common practice—but it can be done even more cost-effectively:
How Temper helps reduce staffing costs
Temper provides a modern and cost-effective alternative to traditional recruitment methods. It was created to give businesses and professionals more flexibility and autonomy.
Key benefits of using flexible professionals via Temper
Dynamic scheduling
- Post shifts far in advance or last-minute to cover absences or meet demand.
- Shifts can be as short or long as needed—you only pay for hours worked.
Transparent pricing
- Freelancer rates: From £12.75 per hour
- Platform fee: £3.32 per hour
- No onboarding costs or hidden fees, ensuring better budget control.
Quality & performance insights
- Businesses rate each freelancer after each shift, ensuring a high-quality talent pool.
- The rating system motivates professionals to perform at their best and helps you find the best match for your business.
Operational flexibility
- Temper’s scalable model supports both small businesses and large enterprises.
- Whether you need one extra worker for a day or a full team for peak seasons, Temper lets you scale up or down effortlessly.
Conclusion
Staffing costs make up a significant portion of expenses in the hospitality sector and directly impact profitability. By planning strategically, using a flexible workforce, and leveraging technology, you can reduce costs without compromising service or quality.
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