- by Alex Alper |
- October 30, 2020
- Restaurant Business | 9 min read
How Much Should Your Restaurant Pay Its Employees?
Restaurant staff: They’re the face of your business and the reason that operations run so smoothly. They’re the go-between for your restaurant and every customer that comes in, dedicated to providing a superior experience for them. That’s why it’s so important to attract fantastic employees so you can foster the best customer experience possible.
Currently, the industry is growing nearly twice as fast as the rate of workers looking to fill necessary roles. Finding your competitive edge will not only entice job seekers to you over your competition but potentially even get people to join the industry for the first time.
How to Gain A Competitive Edge
Employees are, by and large, mainly motivated by one thing: Compensation. Whether via wages or other perks, workers need incentive to join you over another restaurant with all else being equal. Competitive salaries are a great way to encourage candidates to apply with you.
Unfortunately, there’s no perfect standard; there’s no single number that we can give about what exact salary to offer new employees. The wages you can afford depend on your profit margin, the laws in your state, your tipping versus gratuities structure, and more.
Deciding on Pay
Each employee’s pay is typically determined by their role in the business. Are they waitstaff or cooks? Hosts or runners? All of this affects the average compensation for that role and what you’re actually willing to pay. You want to be sure that the responsibility of each role matches their wages.
You should also consider if you’re going to use a tipping model, gratuity model, or something else. If you plan on subsidizing employees’ wages with tips, then the federal minimum wage is $2.13 as long as they make up the rest in tips every paycheck cycle, and the business gets a tip credit. You also need to consider how to tip out your employees. For example, some restaurants do tip pooling, and others share tips with the back-of-house staff. All of this will affect potential employees’ opinions on working with you. Look into the legal regulations surrounding tips and gratuity laws, its effect on salaries, and how that will change your tax filing and reporting.
However well you’d like to pay employees still doesn’t mean much unless you can actually afford it. To best determine how much to pay the staff, determine the highest and lowest salary you’re willing to offer each position. You might ask questions like:
- Does this role drive operational growth or streamline efficiency?
- What would similar and nearby food service establishments offer for this same job?
- How much would an experienced candidate expect?
- Can the discrepancy between our highest and lowest paid staff incentivize working harder for the promise of upwards mobility?
Oftentimes, workers just want to move up in the world. A competitive salary one step up from what they earned before can be indicative of career growth and thus more enticing than just earning the same exact wages they were at their last job. Though you can circumvent this by hiring fresh faces with little to no experience, you also risk hurting your business with less capable employees as well as more time and money spent on training.
Keeping all of this in mind along with federal and local labor laws, overtime, and adherence to the Fair Labor Standards Act, you can determine the highest and lowest amount you’d be willing to pay for the role and then begin negotiations with promising candidates from there.
Other Benefits and Perks
Frankly, nothing beats a living wage. Industry employees talk just like businesses do; word of mouth doesn’t exclusively apply to advertising. You’ll draw in better employees by offering competitive pay and treating them right, because word will get around.
However, as many restaurants begin to catch on to the power of the paycheck, you might seek out other opportunities to draw candidates to you. Offering perks and benefits will set you apart from the masses. You might consider giving your staff health insurance, paid time off, vacation days and other benefits. Oftentimes people want acknowledgement of their hard work, so it can incentivize productivity to do things like recognizing the employee of the month or buying dinner for particularly outstanding shifts. Perks and benefits can really motivate your team to do their best.
Set Employees Up For Success
As important as good pay is, don’t underestimate the power of a positive work environment. This fosters better employee-management relationships more than you might think; supportive companies mean a lot to staff members on an individual level. Many employees also find it important to have a friendly relationship with coworkers as well as career opportunities for promotions and professional development.
It’s beneficial to create a comfortable and positive workplace anyway. More contented employees work harder and don’t have to dig as deep to give that standard service with a smile. Restaurants that get rated as better places to work also tend to have greater customer satisfaction overall. Happy employees make happy guests.
Employees want to feel good about going into work. You’re in a position to make that happen.
Attract and Retain Workers
Cultivating a comfortable, supportive work environment is massively useful for drawing in top-notch candidates with impressive resumes. It can be difficult and time-consuming to weed out exceptional candidatesall of it begins with the job posting itself. Once you recruit a good core staff, train them well so they don’t have to spend much time learning the ropes and can be well prepared to hit the ground running.
There’s no one-size-fits-all when it comes to properly compensating your employees. Every worker and restaurant has different expectations when it comes to benefits, perks and pay. Understanding each other’s needs as well as your own, researching local and federal laws, scoping out the competition and calculating what your restaurant can personally afford is a good place to start wage negotiations with each new employee.
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