Restaurant Labor Costs in Texas

Texas follows the federal minimum wage of $7.25 an hour and allows the full federal tip credit, so the minimum cash wage for tipped employees is $2.13 with a $5.12 credit. In practice the statutory floor is close to irrelevant to what you’ll pay: competition for staff sets the real rate, and BLS national medians for kitchen roles sit far above $7.25.

Figures verified July 2026

Statutory rates

Statutory wage rates in Texas
Rate	Per hour	Source
State minimum wage¹	$7.25/hr	U.S. Department of Labor, Wage and Hour DivisionRevised 1 January 2026
Minimum cash wage (tipped employees)	$2.13/hr	U.S. Department of Labor, Wage and Hour DivisionRevised 1 January 2026
Maximum tip credit	$5.12/hr	U.S. Department of Labor, Wage and Hour DivisionRevised 1 January 2026

¹ Texas follows the federal minimum.

Next scheduled change: 1 January 2027. Texas tracks the federal minimum; review annually for federal changes.

On role-level pay data

Median pay by role for Texas comes from the Bureau of Labor Statistics, linked below. It's the number worth looking at here, because the statutory floor is so far below market that it tells you nothing useful about hiring.

From an hourly rate to a labor cost percentage

The rates above are what you may not pay below. What an hour costs you is larger, once the on-costs below are added, and the labor cost percentage calculator will turn the two halves into a figure you can compare. The prime cost calculator then tells you whether that number and your food cost together leave room for rent and profit.

Tips and tip handling

Federal law allows a tip credit: you may pay a cash wage as low as $2.13 an hour provided tips bring the employee up to at least the full minimum wage, and you must make up the shortfall when they don’t. States diverge sharply from there, and several have abolished the credit entirely. Texas permits the full federal credit, so tipped employees may be paid $2.13 in cash where tips make up the balance. You are responsible for tracking that they do, and for topping up any week where they don’t.

If you need to write this down for your team, the tip-out policy generator produces a plain-language policy document, and the tip-out calculator handles the nightly split.

What else drives your labor cost here

The floor tells you nothing

In a state where the statutory minimum sits this far below market, budgeting from the legal floor produces a rota nobody will work. Price against what kitchens down the road are paying, and treat $7.25 as a compliance number rather than a planning one.

Tip credit record-keeping

Running a $2.13 cash wage means you carry the burden of proving tips made up the balance every single week. The administrative cost of doing that properly is real, and the cost of doing it badly is worse.

Turnover in a competitive market

Texas metros compete hard for the same cooks. Recruiting and training costs rarely appear on the labor line, and in a high-churn site they routinely exceed whatever a thinner rota saved.

For what your percentage should be measured against, see the cost benchmarks by type of food business.

Run your own numbers

Labor Cost Percentage CalculatorTurn total labor cost and sales into a labor % you can compare against industry norms.Tip-Out CalculatorSplit a shift’s tips in seconds — support tip-outs off the top, then pooled by hours. Remembers your team.Prime Cost CalculatorCombine food and labor into your prime cost % — the single most-watched number in restaurant P&Ls.Break-Even CalculatorFind the revenue — and the number of covers — you need to cover every cost.

Competing for staff, not on wage floors

When the statutory minimum is irrelevant and everyone’s bidding for the same cooks, the way to protect margin is more sales per rostered hour. Bzz turns tables faster on the team you’ve already hired.

Frequently asked questions

What is the minimum wage in Texas?

Texas follows the federal minimum of $7.25 an hour. The minimum cash wage for tipped employees is $2.13, with a maximum tip credit of $5.12.

Can Texas restaurants use a tip credit?

Yes, the full federal tip credit applies. You must ensure tips bring each employee to at least $7.25 an hour and make up any shortfall.

What do restaurant staff actually earn in Texas?

Considerably more than the statutory floor in most markets. BLS publishes state-level occupational estimates, and the national medians on our US page give a rough sense of the shape.

Labor costs elsewhere

Restaurant Labor Costs in the United StatesFederal floor, the tip credit, BLS median pay by role, and the national benchmarks.
Restaurant Labor Costs in FloridaA scheduled step-up path, and an increase date most states don’t share.
Restaurant Labor Costs in ArizonaA flat $3.00 tip credit differential, which is unusually simple to model.

Rates on this page are reproduced from the government sources listed below and were last checked on 20 July 2026. They are published for orientation and are not legal advice — before you set pay, confirm the current figure against the primary source for your jurisdiction, including any local ordinance that may exceed it. The headline rate at time of writing was $7.25 per hour.

Sources

U.S. Department of Labor, Wage and Hour Division — Minimum Wages for Tipped EmployeesRevised 1 January 2026 · Government / statistical