Distributing salaries and payroll takes time and effort. It multiplies when opening a second or third restaurant. As an actual scalability test, multi-location restaurant payroll comes with challenges.
You may face challenges with technology, attendance, leave management, and higher costs. Therefore, you need to employ an efficient way of calculating payroll.
Managing a restaurant payroll is a daunting task, especially when you need to do it two or three times. Payroll at a multi-location restaurant can be complicated. Read below for a more detailed explanation of multi-restaurant payroll and ways you can overcome common challenges.
What is multi-location restaurant payroll?
When it's time for businesses to grow and expand, opening another restaurant is a natural progression. Multi-restaurant payroll includes calculating hourly wages, payroll taxes, overtime pay, and more for these additional locations.
Payroll is an umbrella term that covers various aspects of your business, including:
- Paying wages to employees
- Calculating taxes on those wages
- Addressing vacation, overtime, and other unique payment needs
Usually, the HR or accounting departments manage payroll. However, the owner or an associate does this in a small business setting. With the proper system in place, you won't even have to set up separate employee and client files for employees working in other locations.
As your profits and employee count grow, you'll be subject to federal and state regulations.
Here are a few examples:
- The FLSA (Fair Labor Standards Act) establishes guidelines related to overtime, minimum wage, and child labor regulations. It mainly impacts full-time employees.
- The ACA (Affordable Care Act) dictates that businesses must provide health coverage to full-time employees.
- Local Restaurant Associations (like the California Restaurant Association) enforce rules related to cleanliness and other standards.
As your chain grows, greater public scrutiny occurs. Some of it has to do with payroll (calculating insurance requirements and meeting federal wage guidelines); other issues will take your focus elsewhere.
Why is multi-location restaurant payroll an extra challenge?
Calculating and managing payroll on its own is already complex. Adding new employees becomes a strenuous task with more buildings to worry about. Here are some examples:
Addressing inconsistent policies.
Policy and process changes are regular in businesses. Whenever you expand your business, it is your job to enforce the policy. Without consistent guidelines, staff are going to struggle. This applies to payroll when it comes to vacation or overtime policies.
For new multi-restaurant owners, this is a common struggle. Getting staff to buy in (even when you aren't there) is a challenge. So you have to find someone you can trust, which is also challenging.
However, owners that don't delegate often spend most of their time scrambling between restaurants. You can accomplish little while doing too much as a result. So you must be willing to entrust your policy management.
Take the time to review your policy with trusted leadership. Afterward, leadership should feel empowered to enforce all aspects of your policy. Just make sure you keep all parties informed with the latest guidelines.
Reliance on old systems
If you've ever heard "if it ain't broke, don't fix it", you've probably seen a business fail.
Here's a quote from Jim Schweigert, President of Gro Alliance, on this issue:
"… without improving your company, division, process, or basic business practices, you will start a slow decline into irrelevance and failure."
For example, many old-fashioned companies rely on Excel spreadsheets. While you can do some nifty things and get a general idea of costs, it does not count as payroll software.
The higher chance of human error will result in missed overtime as you manually pay your employees. While you have to look at 25 payrolls, your employees only have to look at one. These people are more likely to notice inconsistencies.
Having to worry about more people
When it comes to managing leaves, absences, and vacation requests, this may not be a problem when your team is below 30 people. Now imagine tripling that workload. Could you still do it?
The short answer: typically no. Even in delegation cases, you'll still be fielding questions on what staff you need. The use of effective scheduling software can help you with this.
Non-compliance with government regulations.
Filing taxes and meeting local, state, and federal guidelines can be challenging. If you include extra people, it doesn't get easier. There's just a higher chance for you to mess something up.
Having software that automates the process helps. If you do this manually, expect more challenges.
Ten tips for running multi-location payroll in minutes.
Managing your restaurant from various locations is critical, challenging, and time-consuming. Even when multi-location payroll seems a difficult task, the following tips can save you time.
1 - Prioritize proper onboarding.
An onboarding system handles all legal requirements and integrates your new employees seamlessly. Automated calculations ensure that all the pertinent information is stored on them. That way, you know whether they need health insurance and what taxes must be taken.
Proper onboarding increases job satisfaction, retention, and employee productivity. It is also critical for speeding up the payroll process. Onboarding allows your employees to submit their required documentation on time and correctly.
It also ensures accurate reports of all employee hourly rates, tips, or overtime. Technology-based record-keeping saves you in the case of a government audit.
2 - Set up staff positions with clear expectations.
Staff positions need to be clear in their duties and functions. When you apply this to payroll, you need to make two things clear:
- How much they are being paid
- When they can expect raises
Making the answers to those two questions clear saves you and your managers time. As you include multiple restaurants, this defined system becomes essential.
Breaking it down by position and duties performed also makes it easy for you to confirm payment. Fewer payment disputes mean more time for meaningful growth.
You should also establish clear guidelines for advancement. Doing so will give people a clear pathway to getting more money — always a solid motivator for producing excellent employees.
3 - Set up your workforce management tools.
Workforce management tools, particularly time tracking, provide easy ways to track small details. If an employee clocks in five minutes early (common for restaurant workers), you can pay them for the five minutes.
A restaurant's workforce management tools may include time tracking tools, scheduling, payroll, and HR. However, workforce management may only represent a vital time tracking and scheduling aspect. Multi-location restaurants can quickly escalate the number of employees clocking in either 5 minutes late or early.
People deserve payment for the extra work they put in. Tracking additional work is an essential aspect of proper payroll. Having a good toolset makes it easier for you to track those changes.
4 - Stop doing payroll manually.
Even in the face of technology, some businesses still do their payroll manually. This tendency takes hours and is prone to error. For example, not paying the extra five minutes a person deserves (read above section).
The potential for fines and penalties is pretty steep. If an auditor can't understand your system, confusion wastes time and money.
Automated payroll software helps save time by automating hourly, salaried, and contingent paying processes. Good software (like that available through Push) also produces easy-to-read reports.
Furthermore, payroll software is a vital element of integrated, Multifunctional Human Capital Management (HCM) Systems. It significantly speeds up payroll processes, reduces errors, and allows managers to customize paychecks for individual workers.
5 - Use the same system across the board.
The Push Operations System enables multi-location businesses to use one platform for their more complex tasks. For instance, you can move back and forth between locations or run payroll utilizing the platform.
Using a payroll system that works the same for all locations saves you time. You can easily track how your restaurants are doing by location.
It also provides you paperwork to put some meat behind issues you've been noticing. Bring the paper evidence to prove your points if you want to change minds.
6 - Automate overtime calculations and tip measurement.
Working in the restaurant industry comes with a high chance of overtime. If you are a waiter or waitress, you can also earn some pretty hefty tips if you have the charm. As an owner, keeping track of that stuff is a bit of a headache, but you have to if you want to keep your business.
Those who don't track these things properly can inadvertently participate in wage theft. It is estimated that nearly 35% of restaurant workers (the tipped ones) experience this. So if you want to avoid it without effort, have an automated system and require your employees to track it, but let your staff keep their tips.
For further ease, you can also associate visual ID with employee tracking systems. Push Operation's time tracking software also comes with facial recognition, allowing you to quickly identify employees working in your business.
7- Automate payroll tax calculations.
Restaurant payroll tax calculations are very complex and time-consuming. Push Operations is payroll software that calculates these taxes for you. Automating that calculation eliminates the inherent risks..
If you violate any of the above laws, you face costly penalties. For example, an underpayment penalty can cause you to pay up to 25% in addition to the current ratings.
Automated payroll systems benefit your employees as well. With a payroll system in place, employees can:
- Choose direct deposit
- Apply for reimbursements
- Adjust benefit withholdings and deductions
- Look up pay documents and history
Taxes taken from employees are also your responsibility. Through good payroll software, you can do much of this without hiring additional staff.
8 - Enable accessible shift trading and digital communication.
When calculating payroll, you want to ensure that every person is accurately tracked. When trading shifts, this becomes more critical. You don't want to pay someone who isn't there.
Easy shift trading involves two bonuses:
- Encouraging digital communication for this request (for tracking purposes)
- Ensuring that your tracked employees receive approved overtime
In cases where you have labor tracking to ensure you don't exceed earnings, overtime pay might bring you over that threshold. Establishing a source of approval is essential. Having a handful of managers to go to with shift-changing capabilities reduces confusion.
The managers leading the two shifts might also be working with limited skill sets. In cases where you trade an experienced employee for a weak one, it's important to adjust accordingly.
With reasonable training procedures, you can avoid this situation. You don't ever want to become too reliant on a single employee. Knowing who is working when is made easier through an automated system.
9 - Recognize multi-site HR compliance concerns.
Suppose you're dealing with a restaurant chain that's expanding and opening new locations. In that case, it can be challenging to keep up with all the local pay, overtime, and breaks. This issue does not include other employment rules and requirements that may affect each location.
It's not uncommon for restaurants with multiple locations to be subject to varying employment rules based on where county boundaries lie in the same township or even in the same neighborhood.
Then staff spread out across different locations, they exacerbate this problem. If workers work in several restaurants, compliance officers must verify that policies are uniform and consistent.
It is, therefore, crucial to sort employees. For most people, the first step in payroll creation is determining who is an independent contractor and a full-time or part-time employee. Even though it looks straightforward, the legal definitions and differences between the two may impact how much a restaurant owes them and how to handle their taxes.
The bottom line: It's time you run your payroll in minutes!
Even with various software tools, restaurant payroll will always cause you headaches. Also, it would be best if you made a significant investment for these tools to work. It is costly to acquire a payroll system and implement and maintain it.
Say no to grueling long hours on restaurant payroll calculations. Your multi-location restaurant business has various options for your payroll functions, including in-house or cloud-based programs. Book a demo with Push Operations today if you are looking for the benefits.
Want to learn more about how to increase profits when running your multi-location restaurant? Download our free guide below!