Between managing high employee turnover, tip distribution, and changing labour laws, payroll often feels like a daunting task for restaurant operators.
But it doesn’t have to be!
The good news is that the rise of tech-driven solutions relieves some of this pressure. Payroll management is becoming more efficient, accurate, and scalable, allowing restaurants to focus on growth without the stress of manual payroll tasks.
In this guide, we’ll explore how restaurant payroll software (like Nory) can improve payroll processes by eliminating errors, saving time, and ensuring compliance with labour laws.
What is payroll software?
Payroll software is a tool that helps you pay your team properly, without the stress. It handles things like wages, tax, holiday pay, and pension contributions, so you don’t have to do it all manually.
For restaurant operators, it means no more second-guessing numbers at the end of a long shift or chasing down timesheets. Instead, everything’s in one place, and payday runs smoothly, just the way it should. 🙌
Why payroll management is a restaurant priority
Here’s why payroll management should be a top priority for restaurant operators:👇
- Complexity. With employees on different contracts, working various shifts, and earning tips, payroll can quickly become complex. But managing the accuracy of these payments is essential to ensure correct and timely payments for staff.
- Compliance. Restaurant owners must navigate a maze of labour laws, including minimum wage rates, tax submissions, and holiday pay. Failure to comply with these regulations can result in costly fines.
- Building employee trust. Timely and accurate pay is crucial for maintaining employee trust. 63% of employees reported that payroll errors negatively affected their trust in their employer. Restaurants that prioritise pay accuracy and meet payroll deadlines see higher employee satisfaction and retention rates, which is good for business.
The need for a tech-first approach in restaurant payroll
Without the proper tools, restaurants can experience payroll errors that harm both the business and its staff. The solution? Investing in restaurant payroll software.
With the right systems, you can tackle these challenges and address the complexities and pressures of payroll management.
But what exactly does it mean to be “tech-first”? 🤔
Put simply, a tech-first approach means prioritising technology at the core of your operations, rather than being an afterthought or an add-on.
In the context of restaurant payroll, a tech-first approach means using software and automation to handle payroll processes from start to finish. Here’s why this approach is so beneficial:
- Efficiency. When technology is integrated at the core of restaurant operations, it streamlines every step of the payroll process, reducing the need for manual entry and minimising errors. If tech is just an add-on, it creates additional steps, slows down processes, and leads to higher chances of mistakes.
- Scalability. A tech-first approach allows systems to grow with your business. As you expand by adding more staff or locations, the technology automatically scales to handle increased demand. If you rely on outdated or disconnected systems, you’ll face bottlenecks and limitations as your business grows. One of the downsides of manual operations is their limited ability to scale efficiently, making a tech-first approach all the more important as your business grows.
- Accuracy. With technology at the centre of your operations, calculations are automated and compliance updates happen in real-time. When tech isn’t central to the process, errors from old software or manual data entry are more likely. It's a common challenge for restaurant owners struggling with disjointed or inaccurate data, but a tech-first approach can turn that around..
- Employee experience. Having technology at the core of your operations makes it easier to offer self-service options to employees, like accessing payslips or adjusting personal details. Without it, employees may experience delays or confusion about their pay.
- Real-time decision making. A tech-first approach allows you to track payroll metrics in real-time, giving you immediate insights into labour costs, employee hours, and other critical data. Without this integration, you're left to make decisions based on outdated or incomplete information.
Nory success story 🥳 See how Rocksalt uses Nory’s real-time insights to make fast and informed decisions that improve the bottom line. As a result, the business reduced labour costs by 7% and increased sales forecasting accuracy to within 97.5% accuracy so that labour was based on more accurate demand!
“Because all the ordering and invoices are updated daily, we can catch a price increase from a supplier pretty much instantly. As soon as we spot it, we can react to it immediately.” - Stephen Burns, Group Operations Manager at Rocksalt.
5 key features to look for in a restaurant payroll system
When choosing a restaurant payroll system, it’s important to look for features that support the unique needs of your operations. Here are some of the key features to consider: 👇👇
1. Automated tip tracking
We probably don’t have to tell you that it can be difficult to track tips manually. But with the new Employment (Allocation of Tips) Bill, it’s essential.
Among other things, the Bill requires you to record how you manage tips. That means employers must track every tip, gratuity, and service charge to ensure it’s all distributed fairly.
This is where technology can help. With a payroll management system, you don’t have to manually track tips and hours to ensure employees get the right tip percentage.
Look at Nory as an example. With Nory Tips, you can easily track tips alongside employee working hours. Instead of manually figuring out how much each employee is owed, the software automatically calculates it for you.
Here’s an example of how it works:
- The Tip Pool is £500 and employees worked a total of 25 hours
- £500 / 25 hours = £20 in tips per hour worked
- FOH 1: worked 10 hours and receives £200
- FOH 2: worked 7 hours and receives £140
- BOH: worked 8 hours and receives £160
And here’s a further breakdown of how it works:
Nory Tips: Nory Tips: Here to Make Tip Management Fair, Fast, and Automated
Find out more about the Tipping Act.
2. Integrated payroll and scheduling
Linking payroll with scheduling and time-tracking is a game-changer for payroll efficiency. It eliminates manual data entry, ensures accurate tracking of hours worked, and automatically syncs timesheets with payroll.
The results? Less errors, less time spent on manual tasks, and happy employees that are paid correctly and on time.
Nory is a great example of software that integrates payroll and scheduling. Our payroll software allows operators to sync approved timesheets directly into payroll. In a matter of clicks, you can settle employee invoices.
You can also use Nory to forecast sales and create demand based schedules. These schedules ensure you meet customer demand while maintaining profitability. How? By not overscheduling staff and overspending on wags. 💁♀️
After all, we know how much labour costs can make a dent in profits.
3. Restaurant-specific compliance
There are a lot of regulations that restaurants must follow when it comes to payroll, like the Tipping Act mentioned above. So make sure to choose a restaurant payroll system that helps you manage these complexities.
This means looking for features like:
- Minimum wage compliance. Look for tools that automatically adjust pay to meet National Minimum or Living Wage requirements, factoring in hours worked and tip income.
- Holiday pay calculations. Choose a system that can handle accurate holiday pay for all staff (including part-time and zero-hour workers) based on their hours and role.
- Real-time HMRC reporting. A payroll system should include Real-Time Information (RTI) reporting to keep you compliant with tax submissions and avoid penalties.
- Auto-enrolment for pensions. Ensure the system can manage pension contributions, automatically enrolling eligible staff and calculating deductions.
- Secure document management. Look for features that securely store payslips, contracts, and sensitive employee data while staying GDPR-compliant.
All of these features help you stay on top of compliance, reducing the risk of costly fines or unhappy employees.
“Unhappy employees?”, we hear you say. Yep – that’s right.
Think of it like this: if you fail to follow GDPR and accidentally share personal information, or inaccurately calculate holiday pay, how do you think employees will feel? The answer is probably not great.
In other words, these features aren’t only good for legal compliance – they’re good for morale and staff retention, too.
4. Self-service tools for staff
Employees appreciate transparency and the ability to manage their own payroll data. It provides them with control and confidence over their pay because they can see exactly what they’re being paid for.
Put yourself in their shoes — wouldn’t you feel much more confident about what you’re getting paid (and whether it’s accurate) if you could access your own payroll information? Chances are, you would.
This transparency also eliminates confusion and reduces the need for any back-and-forth with management. As a result, operators have more time to focus on other areas of work — like improving the bottom line.
Look for software that allows employees to manage key parts of their payroll. With Nory, for example, employees can:
- View and receive payslips
- Update personal details
- See their pension contributions
- Receive real-time notifications about pay, shift hours or holiday allowance
Employees can also swap shifts with employees in the app, reducing the need for management to handle logistical changes. It’s a win-win.
Find out more about Nory’s workforce scheduling features.
5. Payroll automation for growth
As your restaurant grows, whether as a franchise or across multiple locations, managing payroll becomes increasingly complex. From handling staff across multiple locations or hiring seasonal staff, the logistics get harder.
But with the right restaurant payroll software, it doesn’t have to be..
Look for software that can scale with your business as you grow. With this in mind, here are a few of the features to look for:
- Centralised payroll. Manage payroll for multiple restaurant locations in one system, ensuring consistent processes even as you expand. Take a look at Nory as an example – multi-site operators can use Nory Pay to handle payroll for employees at every site.
- Payroll automation. A system that automates payroll tasks should be able to seamlessly handle those same tasks as your business grows. Nory Pay, for example, allows you to automate payroll for all staff. Even as you grow, the software handles the same processes, making sure all employees get paid accurately and on time.
- Role-based pay management. Automatically applies different pay rates for various roles (from kitchen staff to servers) without manual adjustments. As you add more employees to your business, the software should continue to calculate payroll accurately based on each specific role.
Curious to find out more about Nory Pay? Watch the below video to see how it works:
Restaurant Payroll FAQs
1. When’s the right time to switch to restaurant payroll software?
If you’re spending too much time on spreadsheets, dealing with payroll mistakes, or struggling to stay compliant, it’s probably time. Whether you’re just getting started or already running multiple sites, restaurant payroll software can help lighten the load.
2. Is switching to payroll software a big job?
Not with the right support. A good provider will help you get set up and make the transition as smooth as possible. Once it’s in place, you’ll wonder how you ever managed without it. With Nory, the transition is seamless as we’ll be on hand to help you with the move. 👊
3. How does restaurant payroll software help with multi-site operations?
It gives you one central place to manage payroll for every location. No jumping between systems, no doubling up on admin, just one view of all your staff, hours, and pay, no matter how many sites you run.
4. What if my team isn’t very tech-savvy?
Good payroll software should be easy for everyone to use. Most systems are built with simplicity in mind so your team can access what they need. A key part of this introduction will be change management, so the team is up to speed on how to use the self-service aspect of the payroll system.
Conclusion
Managing payroll isn’t easy, especially given how busy restaurant operators are. It’s hard to find the time (and the skills) to implement payroll effectively when you’re trying to grow your business and manage operations.
By investing in restaurant payroll software, restaurant owners can automate and scale their payroll operations, reduce errors, and maintain compliance with labour laws.
If you're still using outdated payroll systems (or aren’t using any at all), now is the time to adopt a smarter, more efficient solution. Whether you're dealing with shift work, managing tips, or addressing complex contracts, Nory offers a smarter way to handle payroll from start to finish.
Reach out to the team to get the ball rolling!