Payroll For Restaurants: Keeping Things Simple With Software

Restaurant payroll software involves playing with a delicate mix of ever-changing ingredients. Restaurant owners and operators have to be as skilled with spreadsheets as their chefs are with knives. One false move and margins collapses; profits can be wiped out, and a great Summer can turn into a cold Winter.

Restaurant operators face multiple challenges, the kind of daily headaches that most business owners don’t have to worry about. There’s high staff turnover, wholesale food costs well above the consumer price index, the direct impact of lower tips, as well as higher costs as a result of the Affordable Care Act.

The only recent piece of good news, as far as the leisure sector is concerned, is the American consumer is spending more than ever. The IMF estimates the US economy will grow 3.6% in 2015, which means more people should be eating out.

Stop worrying about payroll.

Each restaurant is different of course, but one approach to management that is proven to work well is combining food and staffing expenditure as a budgetary line item. A restaurant owner can then assign a suitable percentage to these ‘prime costs’, which, if adhered to, means the restaurant should always make a profit, depending on market conditions.

Recommended: Data-Backed Ways to Engage Employees and Reduce Restaurant Turnover

“Labor costs, in particular, run a wide range in restaurants — as low as 25% and as high as 35 or 40% — depending on the menu, concept and other factors;” which is why they need to be controlled and monitored proactively.

The only stress – that shouldn’t be a factor if takings are as consistent (accounting for seasonal variations, of course) – is ensuring there are sufficient funds in the payroll bank account. And keeping those funds entirely separate is also a great way of reducing any stress around your payroll. At least this way you know there’s literally money in the bank.

Can Payroll for Restaurants be Made Simpler with Software?

We’re a little biased, admittedly since we’ve created restaurant payroll software our customers love because it makes their lives easier. So we do happen to think that software is part of the answer when it comes to making things simpler for small businesses, including restaurant owners.

Software is only part of the answer?

As a restaurant owner, you have to deal with hundreds of challenges of all sizes every single day. Suppliers need to be consistent, especially when something goes wrong. You don’t need added stress, which can happen when you are left with a problem a supplier takes ages to solve.

We love other small businesses, especially restaurants, so with Wagepoint that doesn’t happen. We strive to fix any problems and answer all questions – over the phone – as quickly as possible. So far, we’ve always done this within 24 hours.

Recommended: Restaurants Reverse Turnover Rates with These 4 Scheduling Strategies

Beyond personal service, you should expect your payroll software (since many in the sector are saying that “outsourcing is the new normal”, in part thanks to the ACA) to take care of the following:

1. Keeping records. The Department of Labor should be able to inspect your records with only 72 hours notice, and these need to go back the last six years.
2. Handle multiple states and different locations without a problem. Keeping your taxes fully up to date, whether you’ve got one or two hundred restaurants is a basic requirement for all payroll providers.
3. Support tip reporting and compliance. All you need to do is deposit ‘makeup pay’ if tips drop below your States’ minimum wage.
4. Onboarding new staff and dealing with staff turnover. It should be as easy as signing up to Facebook, especially given the rate of turnover in this industry.

Except for larger restaurants, you should check what type of software your payroll provider uses. Older firms will use some form of human capital management system, which can be time-consuming for smaller operations.

Payroll for restaurants needn’t be stressful. With the right approach to your accounts, forecasting, and keeping that prime cost percentage on track then you’ve already won half the battle. If you decide to outsource, then you need a payroll firm that makes things so easy that you no longer have to spend time worrying about payroll anymore.

Guest Blog Post: Shrad Rao, CEO at WagePoint

Shrad Rao is the CEO of Wagepoint where they make mind-bogglingly complex payroll software into a simple web-app that is ridiculously easy to use. He also frequently conducts social experiments within the company to challenge established human resource norms with the sole purpose of making Wagepoint’s employees giddy-happy. You can ask him about payroll software, unconventional leadership techniques and how to train cats to backflip – without harm.