When you’ve got your eye on expansion, the last thing you need is for time-consuming human resources tasks dragging you back. But for far too many restaurant owners and operators, that’s exactly what happens.
Payroll, compliance, benefits — there’s a lot to juggle. And frankly, your time is better spent on the tasks that will drive revenue and growth. Luckily, a Professional Employer Organization (PEO) provides the perfect solution to your HR growing pains. If you aren’t familiar with PEOs, be sure to check out our article, “What is a PEO? Everything restaurant owners need to know.”
With a PEO, you can outsource HR for your restaurant to the experts and take advantage of a wide range of benefits in the process. So, what does that mean for you? Here are the top eight benefits growing restaurants gain when they work with a PEO.
Small businesses that work with PEOs report 7% to 9% faster business growth, according to the National Association of Professional Employer Organizations (NAPEO). We’ve seen this at Fourth as well. In fact, the majority of our PEO clients came to us for operational support to fuel their restaurant’s expansion into new markets.
Working with a PEO results in 27.2% annual cost savings on average, according to NAPEO. As restaurants expand into new locations, their staffing needs grow too. This usually means adding headcount dedicated to HR. However, when you work with a PEO, there’s no need for additional overhead. The majority of the annual cost savings small businesses report when working with a PEO comes from savings related to internal HR salaries and the cost of health benefits.
The same NAPEO study found that PEO clients are 50% less likely to go out of business than businesses that don’t work with a PEO. The restaurant industry is known for its volatility. Anything you can do to stack the odds in your favor is a smart move. PEOs not only help restaurants operate more cost-efficiently, but they also help protect you from compliance risks that could lead to hefty fees and other repercussions that could jeopardize your business.
PEO clients report a 16% increase in profitability and 40% growth in expected annual median revenue, according to NAPEO.
So, it’s safe to say that not only do PEOs ease the HR burden on your management staff, they’re also good for your bottom line.
It’s no secret that restaurants are understaffed, and a big part of the reason for that is high employee turnover. The ripple effect of turnover can be significant. Black Box Intelligence estimates it costs restaurants $1,956 per hourly employee to replace someone who’s left. The good news is that small businesses that work with PEOs have 10% to 14% lower employee turnover, according to NAPEO.
The second most significant factor in the cost savings small businesses experience when working with PEOs comes down to the cost of employee benefits. The fact is, PEOs have the buying power of a large organization and can negotiate more attractive health, dental, and retirement benefits for your restaurant staff. They also bring a more comprehensive range of benefits to the table. This means growing small or medium-sized restaurant chains can finally offer benefits that compete with big corporate chains. Offering better, more competitive benefits doesn’t just help with turnover. It also helps you attract top talent.
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Understanding and complying with labor laws at local, state, and federal levels can feel like a full-time job in itself. PEOs take the burden of compliance off your restaurant management team. And, when you work with a company like Fourth that specializes in the hospitality industry, you gain our deep industry and compliance expertise. As you expand into new markets, you’ll mitigate your compliance risk and have confidence in your ability to follow all the applicable laws and regulations.
After everything we’ve covered, it’s clear that working with a PEO provides many benefits for restaurant owners and operators. However, we’d be remiss if we didn’t talk about the benefit to your customers as well. We already shared that PEOs lead to reduced turnover, which is an indicator of a happier staff. All those positive vibes get shared with your diners and lead to better customer service. PEOs also work with you to establish and communicate standard operating procedures, which help your restaurant staff bring their A-game to every shift and deliver consistently exceptional experiences to your customers.
Growth in the restaurant industry demands more than just culinary expertise. It requires operational mastery. By working with a PEO, you’re able to outsource confusing and time-consuming HR responsibilities and focus your efforts where they belong — on fueling growth.
At Fourth, we’re not just any PEO company — we specialize in hospitality. Our HR teams know the unique compliance and tax challenges restaurants face inside and out. As you set your sights on continued growth and expansion, you can count on us to lift the administrative burden from your shoulders.
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