QSR Operator Overcomes HR and Payroll Challenges with help of HR Provider
Confronted with far-reaching tax issues, a private equity-owned QSR operator faced the threat of mandatory closures in two of the nine states where it operated. And that was just one of their compliance concerns. HR and payroll provider Adams Keegan served up relief by integrating previously disparate systems and bringing their 125 restaurants into compliance. That was just for starters. Read how Adams Keegan quickly turned around the outlook for a large restaurant operator.
A large restaurant operator expanded rapidly through M&A, but this growth tested its operations.
A private equity-owned, quick-service restaurant (QSR) operator acquired a business comprised of six previously separate QSR operators. The combined acquisition included 125 restaurants across nine states and 3,700 employees.
As the operator wrestled with how to integrate these disparate operations, complex challenges emerged, most significantly in the area of HR. The operator would not realize the anticipated return on investment unless it could resolve high-risk and far-reaching HR and tax issues:
- No operational cohesiveness due to inconsistent application and enforcement of HR policies.
- HR and payroll staff were making decisions in areas where they lacked competence.
- Pervasive issues with compliance, reporting, and taxes.
- Operations in two states faced mandatory closure for improper tax payments.
- The company was continuing to pay out benefits for terminated workers.
- HR tasks burdened corporate staff and restaurant managers, taking time away from their core duties.
- The company's payroll service provided no stewardship, failing to offer compliance guidance or flag potential problems.
- Inconsistent onboarding processes led to missed opportunities for eligible employees to qualify for the Work Opportunity Tax Credit (WOTC).
The Adams Keegan Solution
In September of 2017, the company turned to Adams Keegan for help. The Adams Keegan team immediately assessed the tangle of problems and prioritized the most urgent needs. Specialists mobilized to address issues that led to unnecessary costs and waste, threatened closure, and posed the greatest compliance risk, such as taxes, benefits, insurance, and reporting.
Concurrently, Adams Keegan developed a cohesive HR solution that would roll out to the entire company. The primary objectives were to identify and correct areas of inefficiency, and to remove burdensome administrative tasks from corporate staff and restaurant managers. The Adams Keegan team implemented the HR structure needed to ensure successful compliance, while keeping future growth in mind.
Adams Keegan laid out the following initiatives to help the company achieve its objectives:
- Trained all levels of the company's workforce on the new, proper procedures and provided additional one-on-one consultation with management, whenever needed.
- Created an employee handbook that would ensure compliance with federal, state, and local regulations across the company.
- Developed a step-by-step technology systems reference guide for all levels of management and provided continuous updates with additional systems integration.
- Integrated the company's applicant tracking system (ATS) with Adams Keegan's proprietary Efficenter® HRIS, streamlining and automating the hiring and onboarding process.
- A new vice president of HR, vetted by Adams Keegan, worked with Adams Keegan to relieve corporate staff and restaurant managers of administrative burdens.
- Restaurant managers could contact the Adams Keegan team of specialists directly instead of having to contact corporate staff. Managers received immediate guidance and assistance from specialists — no call-backs, no runaround.
- Employees could contact Adams Keegan directly for HR, payroll, and benefits assistance instead of burdening their managers.
After a year of partnership with Adams Keegan, the company's HR and payroll operations are fully compliant with federal, state, and local laws and regulations. The changes implemented by Adams Keegan dramatically improved the operator's return on investment. For example:
- Immediately reconciling benefits payments to insurance carriers for terminated employees saves $30,000 per month.
- WOTC credit compliance improvement generates an additional $50,000 to $60,000 in tax credits per month.
- Adams Keegan taking over activities previously handled by the client saves an estimated $250,000 per year.
In addition, five subsequent acquisitions have gone through smoothly. Today, the company's portfolio has nearly doubled with 50 more locations for the original QSR brand, a new QSR brand with 54 stores, plus newly built locations. Now, the company has more than 6,000 employees.
More proof of the impact made by Adams Keegan is the company's recent acquisition by one of the nation's largest restaurant operators. Adams Keegan helped the company emerge from a chaotic acquisition to become a model for compliance, efficiency, and profitability. The transformation revealed the company to be an extremely attractive acquisition target.