HR and Payroll for Restaurant Employees: The Path to Profitability

Creating a pay schedule will directly impact your restaurant payroll, labor costs, and even the happiness of your staff. Any miscalculation can affect an employee’s paycheck, become a labor law violation, and cause dissatisfaction among your team. Next, you’ve got payroll taxes to manage, including Social Security and Medicare taxes, not to mention state tax and local tax. On top of that, you’ll need to stay abreast of FLSA (Fair Labor Standards Act) norms regarding tipped wages and minimum wage requirements. As a restaurateur, your employees are an essential part of ensuring your restaurant runs smoothly and that you deliver great service. And since labor is typically your biggest operating expense, managing your labor costs is one of the most critical restaurant operating costs to keep an eye on.

Adds powerful capabilities on top of payroll, such as garnishment payment service, SUI management, background checks, and job posting through ZipRecruiter®1. ADP clients can easily find, try, buy and build solutions to help streamline how they manage HR and run their business. Find the best people for your business and reduce turnover through leading recruitment tools, workforce analytics, best-in-class benefits and retirement solutions.

Technology reliance should reduce the possibility of errors and result in the payrolls of restaurants always being up to date. One key benefit, from an integration with payroll and POS systems, is the real-time updates on sales and labor metrics. Restaurant managers will quickly see how the labor cost compares to revenue generated during the day; thus, they should make any necessary changes in staffing on a timely basis. Features such as error-checking protocols ensure discrepancies are flagged before the finalization of payroll, and any such issues should be addressed by managers in a timely manner. Possible errors are reduced, and restaurants increase their overall operational efficiency while ensuring that satisfaction of employees is achieved.

ADP Pricing

While there are some cases in which the penalties may be abated, this isn’t something to bank on. Let’s return to the story of the Wisconsin restaurant that was charged $270,000 in back pay. This case is an excellent example of how invalid tip pools can cascade into even more problems.

Want to catch the full webinar with Jason Schofield, Founder and CEO of Hive V.O.C.? Watch the on demand recording and learn even more ways to improve your restaurant operations. Our team can deliver insights, resolve your issues, and keep your business moving forward. Plus, we offer a 24/7 intake form for Workers’ Compensation claims, ensuring your team is well cared for. As a small business owner or payroll for restaurants manager, you need to speak the language of your ind… This illustrates why it’s imperative to check your state’s website for details on what reports are mandatory and when they’re due. We ranked the most food-obsessed cities by the number of restaurants per 100K residents.

Most of our top five providers offer one package with one base price and a standard charge for each payee. Not so with RUN Powered by ADP, which markets four packages with differing levels of human resources (HR) support. To get more pricing information on RUN Powered by ADP, you have to request a quote with fairly detailed company information. Based on the quote request and expanded HR services, we assume RUN Powered by ADP is one of the more expensive payroll service providers. You can even customize with add-ons like 401(k) plans, life insurance, and HSA accounts to streamline essential business processes. OnPay is excellent for human resource payroll with HR-focused tools, including tools for employee offer letters, Social Security and Medicare, and benefits administration.

Tracking labor and payroll data for restaurant employees

It’s a good fit for a small business that expects or hopes to grow into a large enterprise because you can easily migrate to its enterprise solutions. You can also bundle QuickBooks bookkeeping plans with Payroll to reduce the total cost. When you run payroll, one of the first steps you must take is filing all the necessary legal paperwork.

Top Restaurant Payroll Software in 2025

Restaurant payroll is so much different from that of most other industries since it is mainly composed of variable compensation systems, including hourly wages accompanied by tips. They can reduce your costs, deliver better benefits to the team, curb turnover, and deliver a more effective hiring process. As labor shortages in hospitality and food price increases continue, PEO customers see an average of 27% in cost savings, a 10 – 14% lower turnover rate, and up to 9% faster growth. In this turbulent business climate, PEOs offer a compelling pathway to profitability. Perhaps the most notable benefit of a PEO partnership is that it shifts managers’ mindsets.

• Automation of payroll processes saves restaurants a lot of time and effort, reduces errors, increases accuracy, and saves the right amount of time that would otherwise be spent on such calculations and data entry.
• Failing to follow labor laws or to maintain proper employee records can make you liable for hefty fines.
• If your restaurant uses separate payroll and accounting systems, you are left importing data back and forth, a manual process that can lead to errors or wasted time.

Under the Fair Labor Standards Act (FLSA), tips are considered the sole property of the tipped employee. As a general rule, mandatory tip pooling is acceptable among workers who customarily and regularly receive tips. Including other workers (such as cooks and dishwashers) in a tip pool can lead to complications—and may be illegal.

Who’s considered a tipped employee?

Put a dent in your to-do list with our solutions that integrate time and labor, payroll and HR systems. We’ll help keep you in the clear with wage and hours updates, ACA management and workers’ compensation. ADP RUN payroll software is not the cheapest option and would better suit a restaurant with up to 49 employees and a relaxed budget. A comprehensive platform like Fourth can help you handle a range of HR concerns, including payroll, scheduling, and time and attendance.

In modern times, using the best modern payroll software is one of the best ways to be compliant with changing regulations. Most of such software solutions automatically update in response to new laws and tax rates, thus lessening the tedium involved in manual tracking by the restaurant owner. Summing up all this information from various sources would give a holistic view of operations and enable restaurant owners to monitor labor costs, sales performance, and employees effectively. An integrated payroll system would help to improve overall efficiency in operations and support better decision making.