Every restaurant owner and operator, large and small, feel the pain of payroll every two weeks. Struggling to control costs, this area seems to be a black hole that they can not work their way out of. Instead of attacking this issue like any other on their financial statements, every time payroll has to be funded it creates a visceral emotion in the owner “why is payroll so high?” Contributing 30% to 40% of the total expenses, this area should obviously get the highest level attention of all the restaurant expenses. However, no owner wants to sit down and do a schedule for the employees every week so they hand it down to entry-level management and then they are exacerbated by the results.

Payroll and scheduling are tied directly to each other, and the most important thing an owner or an operator can do is to set up a protocol and a system to be followed by the managers that are actually posting the schedule. This should not be an optional system for management but a mandatory one. In order to analyze payroll costs, the system has to be measurable and standardized; only then can real action be taken to make adjustments and improvements.

There are many excellent products to assist in payroll and scheduling functions. Choosing one that all levels of management can use (yes that includes kitchen staff) is your most important decision. Most POS systems have scheduling modules that allow you to limit when employees are clocking in and out and provide analysis for actual vs. scheduled payroll. There are restaurant intelligence systems that do these functions as well, but also allow you to get more detailed information and reports in regards to comparisons using sales, sales per hour, and revenue centers as they relate to payroll. There are also one-off systems that allow you to enter payroll information for projection purposes and scheduling which add other features such as emailing schedules to employees and allowing employees to switch schedules online.

There are key factors that never change in regards to payroll management regardless of which system you chose for your operation:
• Targeted payroll dollars and percentages (a budget)
• Analysis of sales vs. payroll expense on a day to day basis
(Setting targets for Monday, Tuesdays, Wednesdays, etc)
• Analysis of historical sales for holidays and special restaurant days or promotions
• Controls over hourly and management pay scales as they relate to annual payroll targets
• Maintaining an appropriate level of staffing to avoid split shifts and overtime

About the Author

Jean Hagan, PrincipalJean Hagan
Restaurant, Hospitality
Jean has owned, operated, and consulted in the restaurant industry for more than 30 years. During that time, she worked with a well-known national chain; owned a food and beverage company that operated multiple restaurants, bars, and event spaces in the Squaw Valley area; and became the president, CEO, CFO, and shareholder of one of the highest-grossing restaurants in California. Today, Jean is Principal and leads the Restaurant Operations Consulting practice at KROST. » Full Bio