Restaurant insights by 7shifts

“My compliance system is a sticky note on my monitor.”

32% of restaurants are still running payroll with paper timesheets or notebooks—basically doing napkin math with people’s paychecks. Another 24% keep track of breaks manually. Sure, you may have hands-on control, but it’s a massive time suck, prone to errors, and a compliance risk waiting to happen.

Restaurants in this stage:
👉 Track time on paper timesheets with handwritten adjustments
👉 Manually enter all hours in a spreadsheet (or basic payroll system)
👉 Calculate and distribute cash tips based on daily reports
👉 Manage compliance through memory or manual checks
👉 Understand labor costs only after payroll is complete

“I use software, but nothing talks to each other.”

Admins track time in the POS… then export it… then clean it up in spreadsheets… only to retype it into payroll. Reality is, 31% of restaurants are still typing every employee’s hours into the system. And yes, this is more advanced than paper sheets, but it’s still manual, full of errors, and leaves you stuck as the middleman.

Restaurants in this stage:
👉 Use the POS as a basic, disconnected punch clock
👉 Move data through manual spreadsheet exports and imports
👉 Calculate tip sharing with complex Excel formulas
👉 Rely on basic POS break alerts—but oversight is still on operators

“I’m starting to connect the dots, but I still have to double-check everything.”

This is where your tools start talking. Time-clocking is connected to your scheduling software, which flows into payroll (mostly) automatically. You’re saving hours and cutting obvious errors, but you’re still stuck double-checking data and handling exceptions. Basically you’re building trust in your tech, while being the last line of defence.

Restaurants in this stage:
👉 Use a digital time clock, synced with scheduling software
👉 Transfer data to payroll semi-automatically (still requiring manual review)
👉 Automate tip pool calculations (while payouts may still be manual)
👉 Receive compliance alerts from software to stay on track
👉 Monitor labor costs in real-time, making smarter decisions

“My systems run themselves, so I can focus on my team and my guests.”

This is the dream setup: everything’s connected—schedule, time clock, payroll—data all flowing automatically with zero manual entry. Payroll goes from a 4-hour grind to a 10-minute review. You’ve got tools keeping you compliant and analytics forecasting labor costs before they hit. And with all the admin work off your plate, you can get back to running your restaurant.

Restaurants in this stage:
👉 Flow time tracking data automatically from scheduling to payroll
👉 Process payroll in minutes without manual data entry
👉 Offer instant tip distribution and financial wellness tools for the team
👉 Automate compliance to prevent violations from happening
👉 Use predictive labor analytics to control costs proactively

Some extra servings of payroll-related insights.

📖 Everything restaurant payroll, explained
Running payroll shouldn’t feel like a second job. Here’s a step-by-step playbook to make payroll smoother, faster, and way less painful.

🎥 What to know before running your restaurant’s first payroll
Sam Fung breaks it down for first-timers—initial paperwork, tax considerations, tip pooling, and more. And even if you’re on your hundredth payroll run, there’s still value for you here.

🎥 7 payroll mistakes that can sink your restaurant
An IRS audit notice can change everything. From misclassifying employees to overtime violations—catch these mistakes before they break your business.

We’ll leave you with one last quote from Kevin Yu of 2d Restaurant, which pretty much sums up why nailing payroll (and moving up the benchmark) really matters:

“Payroll, personally, for me—it’s the most important operation in the hospitality business. It is not only the largest single expense for us on a weekly basis, but also the most important tool of retention. Without proper payroll, I mean, that’s going to dramatically affect your retention.”