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How PEOs are Helping Restaurants Survive

Updated: Jan 27, 2023

It is no secret that the pandemic drastically changed consumer behavior and resulted in one of the toughest business environments for the restaurant and hospitality industry. As inflation and food costs continue to rise, restaurant owners are looking at new ways to cut costs and get the most out of their business.

The restaurant and hospitality business are notorious for long hours and high employee turnover. Savvy owners are taking advantage of PEOs to outsource administrative functions of their business and improve employee satisfaction.

PEOs take care of time-consuming services such as human resources, benefits administration (healthcare, 401ks, etc.), payroll processing, workers compensation and risk management. By utilizing PEOs, restaurant owners can receive several key benefits.

Simplify Payroll and Employment Taxes

Partnering with a PEO can help save time and make the day-to-day operations easier. By eliminating administrative burdens, restaurant owners have more time to actively run and grow their business. For example, typically restaurants have complex payrolls compared to other industries due to tips being a large part of employee compensation. A PEO can help reduce payroll hassles and ensure payroll taxes are paid on time. Not to mention, when you partner with a PEO, you get access to payroll experts with years of experience to help with any challenges.

Lower Employee Turnover

One of the largest challenges facing restaurants is the high employee turnover. In fact, the restaurants have over a 75% employee turnover rate, making it one of the highest turnover industries. On top of high turnover causing more time spent on hiring and training, it can cost anywhere from 15% to over 200% of an employee's annual salary to replace a worker in your restaurant.

PEOs can help lower employee turnover by providing great employee benefits. Typically, small business owners struggle to provide their workers with good benefits packages because they are expensive and complex to administer. However, when partnering with a PEO, they can offer the same employee benefits as a Fortune 500 company for a fraction of the cost. The PEO is also responsible for the entire benefits administration process.

According to SHRM, companies that offer strategic benefits perform 58% better than those that don’t. Companies that offer benefits also recruit 20% more effectively and are 28% more likely to retain employees.

Mitigate Risks and Avoid Lawsuits

More often than not, restaurants rarely have a dedicated HR person or team. A PEO acts as an extension of your HR team so you can rely on them with any challenges. Unfortunately, the restaurant industry experiences higher discrimination and harassment claims compared to other industries. The HR support can help with discrimination and harassment prevention training which could save owners thousands in potential lawsuits.

Aside from HR risks, a PEO can also help business owners maintain compliance. PEOs provide I-9 compliance which ensures all employees are compliant with INS regulations. A PEO can also help business owners audit current pay methods to guarantee they are compliant with Fair Labor Standards. Laws and regulations are constantly changing and vary state to state. Keeping up with the legal landscape can be complex and time consuming for the average restaurant owner. PEOs actively stay up to date on changing laws and put together plans to ensure clients stay compliant.

Save Time and Money

Most business owners didn’t go into business to be bogged down by administrative tasks. That’s why turning to a PEO may be a great solution since PEOs can free up time by handling back office functions. Additionally, PEOs are a one stop shop for multiple services versus outsourcing to multiple providers, making PEOs simpler and more efficient.

PEOs also can play an integral role in helping restaurant owners manage cash flows. PEOs provide flexibility by having a “pay-as-you-go” structure instead of purchasing bundled or front loaded services from another provider.

By grouping together their clients, PEOs are able to achieve economies of scale to purchase benefits and insurance plans at a much cheaper price, passing those savings on to their clients.

The Cornerstone Advantage

Like other PEOs, Cornerstone helps businesses save significantly on employee benefits, automate your payroll, lower your experience modifier, and help with employment related compliance. However, unlike other PEOs, our focus is on excellent customer service.

Other PEOs will just add you to their system and send you an invoice. At Cornerstone we assign a professional customer service rep to work with your account. This not only adds more of a human touch, but it also allows us to create custom solutions unique to your business. Got questions? We have a rep to help you answer them. A problem occurred? You have a rep who understands your business and can create an effective solution.

Contact us here for a FREE consultation.


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