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How Much Is Overtime Costing You?

See the real cost of overtime hours and how much you could save with better shift scheduling.

1 Employee Data

2 Hours & Overtime Rules

How to Calculate Overtime Costs in a Restaurant

Overtime is one of the biggest hidden costs in the restaurant industry. Studies show that restaurants spend an average of 10-15% of their total payroll on overtime, though most owners believe the number is under 5%.

The Overtime Cost Formula

The basic formula for calculating overtime costs:

Overtime Cost = (Actual Hours βˆ’ Standard Hours) × Hourly Rate × Overtime Multiplier

For example, if an employee earning $15/hr works 46 hours instead of 40 at 1.5x overtime:

6 hours × $15 × 1.5 = $135 overtime premium per week
$135 × 52 weeks = $7,020 per year for just one employee

Why Overtime Kills Restaurant Profits

Problem Impact
Direct costsEvery OT hour costs 50-100% more than regular
Declining productivityAfter 8+ hours, efficiency drops 25-30%
Staff turnoverBurnout from overtime is the #1 reason for quitting
Errors & qualityTired staff make more mistakes, hurting guest experience
Legal riskUntracked OT leads to wage theft lawsuits and fines

5 Ways to Reduce Overtime

  1. Accurate demand forecasting β€” schedule shifts based on historical foot traffic patterns
  2. Cross-training β€” employees who can fill multiple roles give you scheduling flexibility
  3. Automated scheduling β€” use scheduling apps like Shifty to plan shifts clearly and keep your team organized
  4. Split shifts β€” replace one long shift with two shorter ones during peak and off-peak
  5. Real-time monitoring β€” track employee hours throughout the week, not just at payroll time

Simple Shift Scheduling

Shifty helps you build schedules fast, manage shift swaps and time-off requests β€” right from your phone.

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Overtime Laws You Should Know

Under the federal FLSA, overtime is required after 40 hours per week at 1.5x the regular rate. However, some states have stricter rules:

  • California β€” overtime kicks in after 8 hours per day (not just 40/week), and double time after 12 hours
  • Colorado β€” similar daily overtime rules (after 12 hours)
  • Alaska β€” overtime after 8 hours/day for businesses with 4+ employees

Our calculator uses customizable thresholds and multipliers so you can match your local labor laws.

Frequently Asked Questions

How do I calculate overtime costs for my restaurant?
Multiply overtime hours by the hourly rate and the overtime multiplier (typically 1.5x). For example: 6 OT hours Γ— $15/hr Γ— 1.5 = $135 per week. For 10 employees, that is $1,350/week or $70,200/year.
What is a healthy overtime percentage for a restaurant?
A healthy target is less than 5% of total payroll. If overtime exceeds 10%, it signals scheduling problems. The industry average is 8-12%.
How can I reduce overtime without hurting service quality?
Three key steps: 1) Use historical traffic data to schedule accurately, 2) Cross-train employees so they can cover multiple roles, 3) Use a scheduling app like Shifty to plan shifts clearly so everyone knows when and where to work.

Schedule Shifts Without the Chaos

Shifty is a shift scheduling app. Build schedules in minutes, manage requests, and keep your whole team in the loop.

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