Key Payroll Trends 2025: How Restaurants Can Keep Up

By Michelle Saco | 14/03/2025 | 3 min read

Payroll in the restaurant industry is as complicated as ever—and 2025 won’t be any different. With a new presidential administration, businesses need to stay nimble, especially with potential wage and hour regulations shifting on short notice. On top of that, high turnover rates aren’t going anywhere.

Successful restaurants will need to anticipate ways to adapt to an evolving landscape. Here's a closer look at restaurant payroll management as we move into a new business environment this year.

To stay ahead, restaurants need payroll systems that can handle evolving challenges. Here’s a closer look at what’s changing and how restaurants can adapt.

More restaurants are turning to technology to automate payroll. Why? Because automation eliminates repetitive data entry and streamlines tax calculations, withholdings, and payments. What used to take hours can now be done in minutes with the right system.

Since the COVID-19 pandemic, restaurants have had to struggle to attract and retain the best talent. To meet staffing needs, restaurants have had to employ more gig economy workers. These employees may only be willing to work non-traditional shifts, making scheduling more challenging for managers. Flexible payroll systems are a must for this new paradigm.

But payroll isn’t just about cutting paychecks—it’s about managing people. Staffing challenges have been ongoing since the COVID-19 pandemic, and many restaurants now rely on gig workers with unpredictable schedules. Flexible payroll systems are essential to managing non-traditional shifts and keeping operations running smoothly.

And then there’s compliance. Labor laws are always evolving, and the current administration has signaled plans for regulatory changes. While we don’t know exactly what’s coming, restaurant owners should be ready to adapt quickly.

Navigating Labor Costs and Turnover

Payroll software is a game-changer for managing labor costs.

Here’s how it helps:

Forecasting: Analyzes past payroll data to predict labor costs for peak seasons or holidays.
Overtime Management: Flags potential overtime issues before they happen, so managers can adjust schedules proactively.
Budgeting Assistance: Helps restaurants plan workforce expenses, even during fluctuating business levels.

Predictive analytics can also help restaurants anticipate turnover trends. In an industry known for frequent staff changes, staying ahead of hiring needs can reduce last-minute staffing shortages.

The Rise of Gig and Seasonal Workers

Managing payroll for a transient workforce isn’t easy. Hour tracking, overtime calculations, and contract variations all add complexity.

During busy seasons, you may need to ramp up staffing quickly while juggling complex scheduling demands to cover peak hours. During slower periods, you’ll need to cut back hours—fairly and strategically—while staying compliant with labor laws on shift lengths and employee breaks.

Advanced payroll software helps simplify this balancing act. It keeps track of final paychecks, new hire onboarding, and labor reporting, making payroll management far less stressful.

Staying Compliant with Wage and Hour Laws

Most restaurant workers in the U.S. are non-exempt employees, meaning they’re entitled to minimum wage, overtime pay, and other protections under the Fair Labor Standards Act (FLSA). But payroll compliance in hospitality isn’t always straightforward—many states have stricter labor laws that override federal regulations.

That’s where payroll software comes in. It ensures wages are calculated correctly, employees are paid on time, tax forms are filed properly, and worker classifications are accurate. If labor laws change, the system updates automatically, helping restaurants stay compliant without the hassle.

And because automated payroll reduces human error, it minimizes the risk of costly penalties for non-compliance.

The Bottom Line

The right payroll solutions save time, help restaurants stay compliant, control labor costs, and easily manage high turnover. With automated payroll and reporting, you can focus on what really matters: delivering a great dining experience.

Explore IRIS’s tailored payroll solutions to streamline your payroll processes and stay ahead of compliance. Contact us today to learn more.