Daily, Weekly, Biweekly? What’s the Best Pay Schedule for My Restaurant?

After a rough few years due to the pandemic, restaurant workers now have a reason to celebrate: Their average hourly earnings have grown 66% from 2017 to April of 2024, according to data from the Square Payroll Index, compared to 40% growth for retail workers.

This is a positive development for the restaurant industry, which has been battling higher rates of turnover compared to other industries. Pay of course is the most important element of most jobs, and in the restaurant industry specifically, not getting paid enough is the top factor in an employee’s decision to quit, according to 7shifts data released this past summer.

But it’s not just the amount of money that employees care about—when they are paid is also an important factor for restaurant staffers. Restaurant owners can choose the payroll schedule that works best for their business as long as it's compliant with state regulations. Most restaurant operators go with monthly, weekly, or bi-weekly schedules. There’s also a growing trend of daily payouts for restaurant workers. According to 7shifts data, four out of 10 restaurant workers would find this option more appealing and said it would boost their engagement at work.

That said, each payroll schedule comes with its own advantages and drawbacks. Let’s dive in:

Monthly: With this schedule, restaurants pay employees once per month. It’s often the least liked for many employees because it leaves them to rely on only one check each month. While it’s simpler for restaurant management, it can lead to cash flow problems for smaller restaurants if they don’t keep their books properly balanced.

• Advantages/disadvantages: Because significantly less paychecks are being distributed (12 per year as opposed to the usual 26 or 52), monthly payouts makes tracking payroll simpler for restaurant managers. This is a double-edged sword, however, as it could leave workers scrambling to pay their expenses until their next paycheck arrives.

• Who it benefits: As mentioned, monthly payments are easier to track, but using this payroll schedule may lead to higher turnover. Workers may also find waiting weeks to receive their tips a hard pill to swallow.

Bi-weekly: With this schedule, employees are paid every other week, usually on the same day, for a total of 26 pay periods in a calendar year. This strikes a balance between monthly and weekly payouts and is the most common pay period in the hospitality industry. There’s also the less popular option of semi-monthly payouts, in which workers are paid twice a month for a total of 24 payments a year.

• Advantages/disadvantages: Workers should be comfortable with a bi-weekly schedule, as it's the most popular in the country. It should also make tracking payroll and tips payouts simpler because workers are typically paid on the same day.

• Who does it benefit: This option is the most popular for a reason, as both workers and management are familiar with it.

Weekly: With this schedule, paychecks are cut every week. This is a popular option with restaurant workers (and the second most popular overall in the U.S.), but it can be difficult for restaurant owners to keep this schedule, as tracking tips could make things complicated.

• Advantages/disadvantages: Workers should appreciate the cadence of working a week and being paid for it, a schedule that sees cash constantly flowing to their accounts. As mentioned though, management will have to spend time each week calculating tips payouts, which may be seen as a burden to day-to-day operations.

• Who does it benefit: Workers are more likely to stay in their jobs knowing payday is coming every week.

Daily: Who wouldn’t want to be paid the same day they work? This payroll schedule can be unwieldy, and paying out daily tips is easier when patrons tip with cash, but has become more complex now that so many are paying with credit. With this option, restaurant owners will likely need the help of a payroll system but employees are typically happier because they never have to wait for money they've already earned, which in general reduces turnover rates.

• Advantages/disadvantages: Workers will appreciate getting paid the same day they work. However, daily payouts may be a bit of a nightmare for management when it comes to tips. It may be simple if patrons leave their tips in cash, but things get more complex with credit card-based tips.

• Who does it benefit: As mentioned, almost half of restaurant workers said they’d be more engaged at work if they were paid every day.

Whatever schedule a restaurant owner chooses, payroll is a lot simpler of a process when using the services of a payroll provider. Most of these software-based options allow managers to choose a schedule, then automatically pay out salary and tips based on that cadence. Workers can also track their paychecks via website or app.

The payroll schedule at your restaurant will have a significant impact on your employees and could be a major factor in whether they stick around. Consider your options carefully and determine which schedule works best for your business.