Seven Restaurant HR Challenges to Overcome

Seven Restaurant HR Challenges to Overcome

Entrepreneurs open restaurants because they have a love of food, or a cooking talent they want to share with the world. Restaurants are often a labor of love but, if there is a lack of attention relating to the human resource aspects of the business, this dream can turn into nightmare. Below we will dive into seven restaurant HR challenges and explore ways to manage them. Keep these in mind in order to stay within the letter of the law, lower you liability, and retain employees long term.


Payroll for restaurants can be tricky because managers are on salary, servers earn tips & hourly wage, and cooks & dishwashers regularly work overtime. It becomes more complex when layered on are federal, state, and local wage rules. If workers aren’t paid the local minimum wage, or if anything mistakenly runs afoul of the Fair Labor Standards Act, owners could face expensive fines and have unsatisfied employees.

How to Overcome – make sure to be aware of the minimum wage for all restaurants. This can vary from state to state and even within municipalities within the same state. For instance, California just overhauled its minimum wage rules at the beginning of 2017. It’s also important to have an understanding of how to handle employees earning tips. Recently, the U.S. Department of Labor mandated that restaurants cannot require servers and wait staff to share tips with back-of-house staff. Though this decision has been challenged and is now pending before the Supreme Court, it’s still currently enforced. Lastly, it is necessary to understand the overtime rules for each of restaurant location by tracking schedules closely, and preventing managers from cutting corners in order to fill up schedules. Overlooking overtime abuse can result in a massive employee lawsuit and a hefty fine from the government.

I-9 Compliance

Restaurants are a competitive industry with a high turnover rate, which makes it more susceptible to overlook I-9 requirements. You wouldn’t want a PR risk like having ICE knocking at the door of an establishment to lead away employees. Additionally, if the government finds out that an owner or operator isn’t dotting i’s and crossing t’s, it could lead to huge penalties and possible prosecution.

How to Overcome – Prior to a new employees start date, make sure to receive the right identification documents from every single employee and fill out Form I-9 when necessary. It’s required to keep Form I-9 for three years after the hire or up to one year after the employee is terminated. Yes, this takes more time, and it may eliminate candidates when desperate to fill positions, however following the law is always the smart move in the long term.

High Employee Turnover

It’s challenging to find people who are a good fit for a restaurants culture. According to the National Restaurant Association, for two consecutive years, beginning in 2016, the industry had a 70% turnover rate. The loss of these employees is expensive and frustrating to restaurant owners & operators. Each loss forces an owner/operator to re-strategize scheduling and forces HR teams to scramble to find replacements. Then it takes time and effort to train a new hire, and may cause customer service to temporarily suffer.

How to Overcome – Keeping good employees can be simple, yet can become challenging in an industry that runs on tight margins. If able, it’s best to pay competitive wages, offer benefits, and provide predictive scheduling for workers (even if it is not required by law.) To be successful, it is recommended to develop a strong onboarding process to train new employees quickly and thoroughly.

Safety & Risk Management

A typical restaurant is filled with sharp chopping knives, hot bubbling pans, and fast-paced servers carrying trays loaded with delicate glassware. The risk of cuts, burns, slips, and broken glass are standard operating procedure. Something as simple as a single slip could lead to a lawsuit from an injured customer or employee. Taking into consideration all the things that could go wrong, how can you keep your staff and customers safe?

How to Overcome – Risk is inherently a part of the restaurant business and can’t be avoided, but you can manage it. For starters, developing a safety manual for all employees will give you a guideline for handling issues that arise. It’s not enough to just write the manual, it’s necessary the management team actively enforce it. Make sure that all spills are cleaned up immediately, require all employees to wash their hands, and provide safety equipment, such as no-slip mats on the kitchen floor and cut-proof gloves. Additionally, it’s important to be prepared and invest in the right types of insurance or consultant to avoid a legal or PR crisis.


In the United States, as we continue to recognize the challenges of different minorities in our community, discrimination is at the forefront. Business owners must be sensitive to both overt and subtle discrimination. This means creating a safe and accepting workplace, addressing wage gaps and promoting equal access to job opportunities. The rules surrounding discrimination are becoming more complex and more strict for businesses of all types. The federal government passed the Lilly Ledbetter Fair Pay Act in 2009, which makes it easier for employees to file a complaint of wage discrimination against their employer. Recently, several states, including California and New York, have updated their gender pay equality laws. Lastly, the Equal Employment Opportunity could soon require large employers to submit information regarding employee compensation.

How to Overcome – Have a firm understanding on the laws regarding discrimination in your state and municipality. Writing up a clear & detailed anti-discrimination policy that is included in the company employee handbook. It’s important that appropriate training is provided to the management team & employees so that all accusations of discrimination are taken seriously. Additionally, consider providing employees with a means of submitting concerns and complaints securely. Finally, it would be proactive to perform an audit of all restaurants. Take a look at the racial and gender makeup of the staff. Analyze who is being hired, who is being promoted, and wage equality. If anything is cause for concern, address it immediately.


Regulating food and labor are important factors for a restaurant owner when controlling costs. Proper menu planning, sales forecasting and employee training are a large focus area when trying to prevent overspending. Looking at the big picture, you will spend the most when creating a valuable staff, purchasing supplies & equipment with the intention of providing quality dishes in a great environment. It might not be most cost effective to use a variety of planning, monitoring and evaluating techniques to control costs. It’s important to consider how your restaurant can save money each month, while still operating at an optimal capacity.

How to Overcome – Nowadays, everything is available with a digital copy, and a great way to avoid excess costs is by automating employee data into a paperless system. One great way to reduce expenses in your restaurant is investing in the appropriate tools for your staff. Between hourly wages, benefits and even training, the cost of employees are high. If you don’t currently have standardized hiring practices in place, there should be. Hiring the right people will decrease turnover, cutting down on training costs, and increase revenue through customer satisfaction.


Making sure that your restaurant is running efficiently is crucial to its success. Having multiple systems and processes that don’t interconnect can cause delays in your business and prevent it from running smooth. Restaurant environments are generally fast-paced and require the utmost efficiency. This is due to being a customer service focused industry. Creating success heavily depends on the flow with which a restaurant operates — customers placing orders, orders being fulfilled and then delivered to satisfied customers.

How to Overcome –Review your current processes. Begin with how employees are hired, look at how you create your menu, How orders are placed, how are sales calculated, what is you payroll process, ect… Consider the technology you are using for these operating processes. Making the right investment in technology could allow for your staff to easily clock in & out, swap shifts, input orders, calculate tab totals, easily distribute tips and more. With an automated restaurant system in place, your staff is then able to focus on creating a better overall customer experience for your restaurant.

How to Manage It All?

It can feel overwhelming to try and manage all of these different risks while still trying to keep the restaurant operating seamlessly. While there is food to make, ingredients to order, and staff to manage it can be hard to find time to write an employee manual, develop an onboarding process, audit the restaurant hiring policies, and stay current on the local wage laws.
Luckily, there are resources available through Stratex to automate and simplify the additional restaurant responsibilities discussed here. Stratex is able to help handle the biggest HR risks, to lower liability and allow the focus to be on what’s enjoyed most– sharing unique dishes while creating loyal happy customers!

The Company Holiday Party: Yes or No Way?

We have to have a holiday party… right?

The holiday season is approaching, and you want to reward your employees for their hard work with a holiday party. But given the risks and liabilities associated with them, it may be time to consider if a holiday party is right for your company.

Is a holiday party the best way to reward your company?

Holiday parties in their best form can foster camaraderie, provide employees the chance to interact with new and familiar faces, and afford employers the opportunity to express their gratitude. But it is no secret that holiday parties pose significant risks: sexual harassment claims, religious discrimination, and drunk driving. New studies have also shown that not only are holiday parties a risky endeavor, they are frequently unwanted and the desired benefits of an end-of-the-year party are rarely received.

Unwanted Benefit

Despite their popularity, office holiday parties are not the preferred benefit for many employees. According to recent survey from Randstad, “90 percent of workers would rather get a bonus or extra vacation days than attend a company holiday party.” Even though this poll is not indicative of the entire workforce, it does demonstrate, when combined with the commonness of holiday parties, a failure by employers to listen and involve employees in the planning of end-of-year rewards. Holiday parties should be planned with the employee in mind, and catered to their needs.

Minimal Interaction

In theory, holiday parties can provide employees an opportunity to interact with new and familiar faces. However, according to a study conducted by Paul Ingram and Michael Morris of Columbia University called “Do People Mix at Mixers“, business persons are more likely to interact with friends at an event than engage with unfamiliar colleagues. This is true even when they had “…overwhelmingly stated before the event that their goal was to meet new people.”

Of course, all workplaces are different. Some are comprised of very outgoing and extroverted people who can take advantage of the social atmosphere parties provide. But most workplaces are comprised of a diverse collection of people, some of whom may not feel comfortable socializing in unstructured events. Organizations should attempt to connect their employees, but the setting and lack of structure in office holiday parties may be off-putting and unsettling for some employees. In these situations, it is crucial that employers accommodate for these differences among their workforce. A holiday party is just one way to reward and connect a workplace, and a risky one at that.


Research has also found that workplace events can even be counterproductive for minority groups. Cheryl Kaiser, a psychology researcher at the University of Washington noted that even if unintentional, holiday parties can adopt subtle practices “…of the dominant group, all of which can convey a lack of belonging… to groups that do not share those preferences.” As noted earlier, employers need to be more attentive to their employees’ perspectives. Doing something because it is tradition is not an excuse to disassociate a certain group of employees. Employers need to be more cognizant of employee differences and make accommodations for these differences.

Why are you having a party?

Before you even consider having a holiday party, think about why you are having the party. If your goal is to reward your employees, consider other options such as replacing the party with time off or bonuses. Even better, involve your employees in this process by asking them about their preferences.

If your goal, in addition to rewarding your employees, is to foster a greater sense of camaraderie, plan more structured events that can more effectively engage your diverse workforce. Consider hosting a volunteer event that pairs unfamiliar departments, throw a luncheon, or schedule a structured activity or entertainment as an alternative to a traditional holiday party.

There is a reason holiday parties are so prevalent: they can be a fun and rewarding event, especially compared to the impersonal gesture of a bonus. But depending on your workforce’s attitude toward holiday parties, and given the inherent risk, it may be time to reconsider your end-of-year plans. Before making a decision, engage in a conversation with your employees and allow them to voice their opinions.

Additional sources:

Littler: Holiday P-A-R-T-I-E-S Protocol

HBR: 4 Reasons to Kill the Office Party, and One Reason to Save It

Daily Beast: Office Parties are Bad for Business

Top 6 HR Restaurant Issues

Owning and managing restaurants comes with many responsibilities such as handling costs, knowing competitors, creating new menu offerings, narrowing down vendors, pricing, and the list goes on. This can make it easy to overlook some of the HR related matters that can lead to overall successful operations. It’s important to be aware of HR issues and the laws that pertain to your business. Knowing how to handle issues as they come up will help your restaurant be a success.

Top six issues related to human resources are listed below:

Payroll and Reporting

Paying a large number of hourly employees can be very time-consuming and a primarily tipped workforce only furthers the level of difficulty. Then there is calculating taxes for all appropriate government levels, particularly for restaurants with multi-state operations, making payroll more complicated. If that wasn’t enough, you’ll need to include adding required reports such as, 940s, 941s, and annual W2s, as well as the collection and input of data from new hires, including W4s and I9s. Costly errors can occur from misplaced quarterly tax form submissions or neglecting to receive completed I9s.

Employee Benefits

The Introduction of the Affordable Care Act(ACA) brought issues around employee benefits to the forefront. An increasing number of employees began evaluating prospective employers based off their benefit offerings. For restaurants not previously offering healthcare benefits, ACA introduced the need to decide on questions such as whether to sponsor a health plan, how to evaluate plan options, how to avoid the employer mandate tax penalty, how to meet reporting requirements, and how to fund benefits. Once a restaurant decides on a plan the options need to be communicated to the employees, as well.

Unemployment Claims

Taking into consideration the annual nationwide restaurant turnover rate of 73%, unemployment claims can be a huge burden for an already-busy restaurant administrative staff. Although unemployment tax rates reflect the size of your organization and what you have paid into the system, they are also based on the amount of benefits collected by former employees. Avoiding wrongful terminations can help reduce the amount of benefits collected and maintain your lower rates. Though tax rates are part of the cost equation, you also have to factor in the time you spend on reviewing claims, discussing them, and negotiating with the review staff. Ensuring an effective way to track employee write ups and supporting documentation could save time and money when fighting claims.

Workers’ Compensation Insurance

The good news is that you can have an impact on your rates. Premium rates, while regulated by each state, are based on your loss history and safety performance over a three-year period. Two ways to reduce your rates; 1) shop for the best rates, taking advantage of group buying power where possible and 2) reduce loss by creating a safer work environment.

Risk Management

 Anyone associated with a restaurant has seen various types of injuries from slips & falls, cuts, improper lifting, and many others because of a rushed environment. These injuries can lead to worker’s comp claims, higher premiums, and not to mention the pain experienced by the employee and loss of productivity in the restaurant. Two easy solutions for this problem could be; 1) to identify the causes for your most common (and most costly) injuries and 2) institute a process of ongoing communication, training, and coaching employees, to make safe operating practices a part of their everyday job. Risk management specialists can be of great assistance in this process.

HR Compliance

Important HR compliance practices could be slipping through the cracks, simply because you are unaware or don’t have the time to properly handle issues. Unfortunately, ignorance of regulations nor a lack of time serves as an adequate excuse for not staying compliant. If you terminate someone wrongfully, if your corrective actions aren’t effective, if your employment verification processes aren’t complete, if job classifications aren’t aligned with wage and hour laws—and so on it can become a problem. With the increase of regulations, which will only pick up speed as they constantly change from year to year, it makes this a critical piece of the puzzle. Owner/Operators must now pay close attention to compliance in order to survive in this tough industry.