Save Money With These Important Restaurant Payroll Facts

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Jamie Fryar
August 17, 2022
restaurant payroll

As a restaurant owner or operator, you wear many different hats. You are tasked with managing employees, making sure your guests enjoy their experience, and running your business operations. But one of the one of the biggest tasks of all, especially if you are not an accounting professional, is restaurant payroll.

But it's a necessary evil - and because money is a driver or success, its' crucial for restaurant owners to understand the complexity of restaurant payroll to fully succeed in managing your business.

These are crucial things to undersatand about restaurant payroll to increase your bottom line.

That restaurant payroll should consider the employee ecosystem.

Restaurants are a unique beast when it comes to the employee ecosystem. With a staggering turnover rate of nearly 67% due to the fact that 90% of restaurant employees are hourly employees, multiple positions and wages (tipped wages – yikes!) it takes a special type of payroll to manage all of the moving parts.

To make it more complex, unlike industries like retail, where only 2-4 positions exist (like sales associates and cashiers), the restaurant industry is made up of many different positions within different departments.

Within one restaurant, you’re managing 2-4 departments under one roof. You have the management department, the kitchen department, the support department, the serving department and you may even take it a step further and break them down into hourly and salary sub-departments.

It's no wonder restaurant payroll can get tricky.

This is why using an integrated solution matters. With an integrated restaurant payroll solution you can set up set positions that automatically are calculated at that rate. When employees punch in or out as different roles, the system takes this into account - and does the calculations for you!

Having an integrated solution also helps by offering the ability to streamline employee approved hours to payroll. This means that when an employee punches in for their shift, managers can automate that punch to be approved or denied based on their schedules. If it is approved - no manual calculations are needed, and payroll is done.

When you manage hundreds, or even thousands of employees who all have variable hourly rates - it's important to use a system that offers these automates to save you a whole lot of time.

The importance of managing labor costs.

As we mentioned before, multiple wages and positions is the norm in the restaurant industry and so ability to accommodate different rates with your restaurant payroll solution is key. Especially when you are calculating your labor costs.

First, ensure that your staff are cross trained to work in different positions to accommodate sudden schedule adjustments. This type of training is crucial in maximizing labor costs and answering the disruptive nature of schedule changes.

Next, it's paramount to ensure you have a restaurant software system that keeps a close eye on your staffs existing labor costs, or forecasted costs due to the fact that restaurant employees don’t work standard set shifts.

You need a solution that considers the fact that there are split shifts, and OT shifts, and this, in combination of irregular schedules, that can result in a lot more tracking of actual worked hours to help you keep track of who has taken breaks, or who clocked in late, and who might go into overtime soon.

And of course, the process of tracking hours and scheduling split shifts  is far more complicated when you employee 50+ employees due tot he fact that some employees may forget to clock in or out.

So what do you do? Optimize labor costs using restaurant payroll with these 5 tips.

  • Opt for a payroll solution that integrates with your POS to help you forecast and schedule based on sales vs labor costs (in real time)
  • Use payroll with scheduling forecasting features to help you avoid creating schedules that put staff into overtime
  • Use payroll with automated stat holiday, overtime and tax calculations to save money when paying staff
  • Use time tracking technology with facial recognition technology to ensure staff aren't being paid for unworked hours
  • Use a scheduling solution that gives you alerts in real time when staff go into overtime pay.

staff punching in

How to restaurant payroll helps keep you compliant.

Compliance is an often looked over topic when it comes to managing your restaurant. Althought there are several ways that restaurants can receive a compliance violation we are going to cover the top 3:  Staff tip calculation procedures, paying staff on time, paying taxes on time, and paying staff based on labor law regulations.

Staff Tip Calculation Producers

Restaurants are highly driven by seasonality. Some months are busier than others; hence staff that were previously listed as part-time can easily be running into full time hours. This can affect your role as an employer, particularly in the case of the Affordable Care Act (ACA). Making sure you’re on top of benefits for the ACA is highly important as the penalties are ridiculously punitive.

Tracking tips is also important, as some states use tips to make up the minimum wage top off.

For example:

  • A server makes $2.13 / hour and utilizes tips to make up the difference to minimum wage ($7.30/ hr).
  • If staff’s combined $2.13 + tips is under the minimum wage threshold, then the employer needs to top of the difference.

This makes tracking tips a crucial par of compliance. As an employer, you might need to ensure staff are reporting accurate tips, especially with cash.

How to Store Employee Documents for Payroll and Taxes

Other key factor when it comes to compliance is understanding how it plays into paying your staff, and taxes.
Staff need to be paid on time to avoid penalties, so ensuring that you have a restaurant management solution that stores all important employee documents in one centralized location is key.

Having one central place to store employee documents means that staff have their payroll information on file and can be paid via direct deposit. It also means that payroll taxes can be done on time, and staff can access their payroll documents easily when it comes time for them to remit.

Lastly, it is important to understand the role that labor law adherance plays in compliance.

How to Stay Compliant with Restaurant Labor Laws

Unless you have a step-by-step guide to labor laws, you might not have known that different states and provinces require employers to comply with unique restaurant labor laws. It's true, and failure to do so can cause employers to be fined or penalized. So how can you use integrated payroll to avoid labor law fines? 

The key to avoiding labor law fines is to ensure that your staff are taking breaks, and to ensure that their brakes are tracked, and accounted for in the payroll system. This can be done using time tracking technology with facial recognition that is integrated with your restaurant payroll solution.

Due to facial recognition and geotagging, your staff are thereby proving that they took their break, when they took it. These breaks are then automatically pushed into your payroll account and staff are paid accordingly.

Using this system ensures that staff breaks are paid and accounted for - and staff are paid accurately, and on time.

Want a payroll solution built for the restaurant industry? We have you covered.

Running a business is hard enough in itself. In the age of technology, the introduction of restaurant management software is quickly making its way into restaurant operations. But it's more than simply finding software to do the work for you. It's about software that carry key qualities of your restaurant's unique needs.

Push Operations built restaurant payroll
that considers all of these unique needs, saving you time and money.  With integrated payroll, HR, time tracking, scheduling and reports - your operations will be taken care of.

Learn how you could save 100k at your restaurant using technology by downloading the infographic below!

save restaurant money

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