Restaurant owners often seek solutions that streamline their operations, and using Toast for both payroll and point-of-sale (POS) systems seems like an appealing choice. After all, consolidating systems sounds convenient, doesn’t it? But is combining your payroll and POS under one provider like Toast really the best move for your business?
While Toast is a popular choice for restaurants, there are critical factors to consider before entrusting it with your payroll responsibilities. In this article, we’ll explore the pros and cons of using Toast for payroll and highlight why outsourcing to a specialized provider like Lift HCM might be a better fit for your restaurant in 2025 and beyond.
Disclaimer: This article represents Lift HCM's independent views based on our experience in the hospitality payroll industry. Toast is a registered trademark of Toast, Inc. While we aim to objectively compare specialized payroll services and all-in-one solutions, we acknowledge that different businesses have different needs. We encourage restaurant owners to conduct their own research and choose solutions that best suit their specific requirements.
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Toast, a popular POS provider, offers an integrated payroll solution. While the allure of combining systems is strong, particularly for tasks like tracking sales and tips, the reality is that payroll is far more complex. It's a minefield of federal and state regulations, tax filings, and intricate issues like overtime and employee classifications.
Key Takeaway: While Toast offers convenience, it may lack the depth of payroll expertise needed to avoid costly compliance errors.
The labor audit distribution pie chart below illustrates that small hospitality businesses face 67% of Department of Labor audits, Large hospitality businesses account for 22% of audits, and Other industries comprise only 11% of audits.
Navigating payroll laws in 2025 has become increasingly challenging for restaurant owners. Issues like tipped employee regulations, state-specific wage laws, and new overtime thresholds require careful management.
Key Takeaway: Expertise in payroll compliance can protect your business from audits, penalties, and employee dissatisfaction.
💡 Did You Know? According to the National Restaurant Association, restaurants face a 33% higher risk of payroll compliance issues when using non-specialized payroll systems, resulting in an average of $12,000 in penalties annually.
The Common Compliance Issues Bar Chart below shows the percentage of restaurants affected by each compliance issue:
Tip Pooling Errors (62%): Incorrect distribution or management of shared tips
Employee Misclassification (58%): Improperly categorizing workers as contractors or exempt
Overtime Calculation Issues (53%): Errors in calculating or paying overtime rates
Meal & Break Violations (47%): Failure to provide proper meal periods or rest breaks
Minimum Wage Violations (41%): Failing to pay at least minimum wage for all hours worked
Record Keeping Failures (38%): Inadequate maintenance of employee time and pay records
Tip Credit Compliance (35%): Improper application of tip credits against minimum wage
When payroll issues arise—such as errors in tax filings or paycheck discrepancies—timely and knowledgeable support is critical.
Key Takeaway: Restaurants gain advantages by collaborating with a provider that makes payroll their primary service.
As your restaurant grows, payroll needs can become more complex. Expanding to multiple locations, hiring contractors, and managing diverse payroll structures require a system that scales seamlessly.
Key Takeaway: Specialized payroll providers grow with your business, offering flexibility and robust features.
Bundling services with Toast might appear cost-effective, but hidden costs can add up. Limited features, additional fees, or the need to supplement Toast’s payroll with other tools can erode the perceived savings.
Key Takeaway: While bundling might not save you money, specialized payroll providers can offer greater value for your investment.
While Toast offers convenience through its all-in-one platform, Lift HCM delivers crucial industry expertise that can differentiate between compliance and costly penalties.
For restaurant operators, Lift HCM's payroll solution's specialized knowledge provides efficiency and protection against industry-specific compliance issues that generic payroll solutions often overlook.
Below is a side-by-side comparison table visually highlighting the expertise gap between Toast Payroll and Lift HCM Payroll.
| Feature | Toast Payroll | Description | Lift HCM Payroll | Description |
|---|---|---|---|---|
| Tipped Employee Support | Basic ⚫ | Standard tip reporting without specialized features for tip management | Advanced ⚫⚫⚫ | Comprehensive tip pooling, credit, and reporting optimized for restaurants |
| Compliance Updates | Limited ⚫ | Generic updates that require manual review and implementation | Proactive ⚫⚫⚫ | Restaurant-specific compliance monitoring with automatic updates and alerts |
| Tax Filing Expertise | Minimal ⚫ | Basic tax filing with limited hospitality-specific knowledge | High ⚫⚫⚫ | Specialized in restaurant tax regulations, credits, and obligations |
| Employee Classification | Basic ⚫ | Standard employee types without industry context | Specialized ⚫⚫⚫ | Hospitality-specific classification guidance to prevent misclassification |
| Regulatory Compliance | Generic ⚫ | One-size-fits-all approach to regulatory requirements | Industry-Specific ⚫⚫⚫ | Tailored to restaurant industry regulations with built-in safeguards |
| Support Team Expertise | General ⚫ | General payroll knowledge without restaurant industry experience | Restaurant Specialized ⚫⚫⚫ | Support team with deep hospitality industry knowledge and experience |
Lift HCM’s Support: Dedicated payroll providers offer specialized customer service teams who can resolve payroll-specific issues efficiently and accurately.
Restaurant owners recognize that payroll requires attention and expertise that goes beyond what an all-in-one provider like Toast can offer. Here’s why more restaurants are choosing Lift HCM:
Key Takeaway: Lift HCM allows you to focus on what you do best—running your restaurant—while we handle the complexities of payroll.
Choosing the right payroll solution is one of the most critical decisions you’ll make for your restaurant. While Toast offers the appeal of convenience, its limitations in compliance, scalability, and support could pose risks to your business.
Lift HCM, on the other hand, provides the expertise, dedicated service, and scalable solutions that restaurants need to thrive.
Ready to make the switch? Contact Lift HCM today to see how we can simplify payroll for your restaurant and set you up for success!