Labor & Operations
The QSR Labor-Cost Outlook for the Second Half of 2026
Wage growth has decelerated meaningfully in the segment, but the composition of hours worked has changed in ways the aggregate figures obscure. What our labor-cost model actually says.
Segment-level QSR wage growth, as reported by both the Bureau of Labor Statistics quarterly QCEW release and by our own operator-panel data, has decelerated markedly over the past two quarters. Year-over-year QSR wage growth as of Q1 2026 is running at 3.4%, down from 5.8% a year earlier and from a 2022 peak of just over 8%.
The aggregate deceleration is real. But focusing only on the aggregate wage-growth number misses two compositional changes that materially affect store-level labor cost, and neither of them is captured cleanly in the quarterly headline figures.
Change 1: More part-time hours, fewer full-time hours
The composition of segment employment has shifted meaningfully toward part-time hours over the past 24 months. Our operator-panel shows part-time hours as a share of total hours worked at 71% in Q1 2026, up from 63% in Q1 2024. The shift is being driven by (a) rising benefit costs on full-time positions, (b) scheduling flexibility that lets operators match hours more precisely to daypart traffic, and (c) explicit corporate-guided guidance to franchisees to run leaner full-time-headcount ratios.
The compositional shift is broadly cost-favourable to operators — part-time hours carry lower benefit load per hour worked — but it introduces operational risk that is not showing up in the wage-growth deceleration. Higher part-time ratios mean higher schedule-management overhead, higher turnover, and (in our operator-panel data) a modest but statistically-detectable increase in order-accuracy errors during peak dayparts.
Change 2: Kiosk-and-app substitution at the front counter
Our operator-panel front-counter labor-hour data shows a 12% year-over-year decline in front-counter labor hours per unit as of Q1 2026, entirely driven by kiosk-and-app substitution at the order-taking function. That is a real cost saving, and it is a real reason the aggregate wage-growth deceleration understates the actual store-level labor cost improvement.
What the model actually says about H2 2026
Combining aggregate wage-growth deceleration with compositional shift and kiosk-substitution, our labor-cost model for H2 2026 forecasts sector-average store-level labor cost as a percentage of sales at approximately 27.1%, down from 28.4% in H2 2025. If this forecast is directionally correct, it represents the first meaningful year-over-year improvement in QSR store-level labor cost since 2019.
The primary risk to the forecast is on the state-minimum-wage side. Six U.S. states have QSR-adjacent minimum-wage increases scheduled for July 1 or October 1 2026 that would, if they take effect as scheduled, retroactively pull aggregate wage growth upward by roughly 40 basis points sector-wide. The California AB 1228 QSR-specific minimum-wage schedule remains the largest single risk to the H2 forecast.