When entering the restaurant industry, it’s an exciting time. You want people to taste (and love!) your food, you want to get regular customers who come back time and time again, and you generally want to make an impact in the community. However, it’s not all dreaming up recipes, selecting the best cuts of meat, and choosing furniture. No, you mustn’t forget recruitment and payroll too.
Just one look at restaurant payroll can lead to confusion. You have to contend with high staff turnover, wages (with tips), different roles, and more. Not only are 10% of working Americans employed in restaurants, but they also make up the largest group of part-time and hourly-paid staff. With this in mind, it’s easy for employees to walk away, and this brings additional costs to training and recruitment. However, it’s nearly impossible to hire salary-based workers because there’s a danger we may not need them. Typically, only head chefs and others essential to a restaurant get a salary.
As a leader of the business, restaurants are unique because you’re in charge of several departments. As well as management, there’s serving, kitchen, support, and potentially even more (depending on the establishment). Utilizing specialized applications like time management software can help you manage some of the more complex components of the restaurant industry, like scheduling, but for HR and payroll, there is even more to consider.
Why Payroll is Difficult
To understand payroll, it’s all about keeping track and playing an active role. In some businesses, it’s reasonable to get an employee set up and then leave them. However, restaurants don’t have this luxury for several reasons;
- Servers especially are of a younger demographic and are limited in working hours
- Workers receive tips, and this can impact wages
- There are no set hours for each employee (it can vary from one week to the next)
- Hours will vary in each season
First and foremost, we recommend documenting everything and ensuring that EVERYBODY is clear on how and why somebody is employed. For example, are they paid hourly? Do their tips contribute to their wages? Will they be paid weekly or monthly? Do they get a physical check, or will the money enter their account automatically? How does income tax withholdings work? Are there any payroll taxes?
Furthermore, specific labor laws affect employees. This includes;
- Minimum wage
- Paid holidays
- Public holidays
If we look at minimum wage and tips as an example, some businesses combine an hourly rate and tips to pay workers. However, these two figures need to add up to at least the minimum wage. If tips and the hourly rate don’t reach minimum wage when combined, the employer needs to front the difference.
Employee Compliance and Getting Help
At all times, you also need to stay on top of employee compliance. During busy seasons, part-time staff can be asked to work full-time hours. If this occurs, you need to offer the right benefits. As an example, the Affordable Care Act has severe penalties for employers who don’t consider benefits.
There are unique challenges to restaurant payroll and things you don’t see in any other industry. In some businesses and something we haven’t even mentioned, employees will work across several roles. Rather than scheduling two employees on a quiet day, they will have one person performing two roles. This – combined with irregular work schedules, different pay structures, and high staff turnover – makes payroll difficult. Here are our tips for conquering the task;
- Consider outsourcing payroll and HR to an external specialist service
- Track everything
- Take advantage of apps and advanced software
- Ensure your business has clear communication between all employees