Updated: Jun 21, 2020
Providing good compensation and benefits is a vital part of managing people in your restaurant. It helps in encouraging your employees to work at their best and make them stay in your company.
Hence, poor compensation and benefits can make them easily give up and worse, quit their jobs.
This is a very hard topic to talk about. Sadly, if you have a local restaurant, sometimes we are not able to compete with the "big guys" across the street and that's a fact.
For instance, Walmart started hiring like a minimum of $9 an hour, now its minimum is $12 an hour. They don't have enough people and as the economy gets better and better, this is turning out to be a severe problem for small businesses like us. The Chick Fil A which is in our strip mall, they pay $12 per hour for their full time.
We, to be honest, are not able to pay people that much, we do for our managers and team leaders but we can't hire them at $12 right away. If you hire them at $12, you give them a raise over and over, and you know where we're going, right?
However, there are tips for you to battle this problem that is going to allow you pay your people more because we need to pay our people fairly or you will be left with C players, those people who nobody is going to hire:
1. Be informed and research - you need to be well-informed, do your due diligence and research.
You need to look up and go to, for instance, Snagajob.com and other different websites where people are looking for jobs.
Whatever you have on your job postings, look up who else is offering a similar job or position to what you are offering and know how much they pay.
It happens when you have a job posting and you don't get anybody to apply for it, so you need to get a hint, there must be a reason for that and you want to check on that, right?
Maybe someone else is paying more for the same position, so at least be aware of that. If you are not aware and you are being ignorant, that is not good for your business.
2. Increase your prices - for local restaurants, it is recommended to periodically increase your prices at least every six months.
You must have a system in place where you gradually raise your prices.
You don't have enough money, then increase your prices, it can be a small percentage for all the items in your menu or a dollar amount for a specific dish.
Every year, you need to increase your prices and one of the main reasons for this is for you to pay your people better.
3. Simplify operations - what does simplifying operations can do to compensate people more and how is that related to retention rate?
Here's what happens when someone gets hired, for instance, in Chick Fil A or McDonald's, within a day, they already can handle their operations.
If your operations are too complicated and if you will not incorporate some batching or some specific training in it and different things like that, it's going to take you a long time to train up people and get them up to speed.
There is this company called Container Store, one of their core values is this idea of 1=3. This company believes that one team member must be productive and be able to fulfill the duties of equal to 3 team members.
It's better to have one A player that can replace 3 C players, and in return, pay that one A player twice as much as a regular employee.
For instance, is it better for you to pay one person for $15 an hour than having 3 people that have $8 each but they are doing mediocre work? So you want to reward people who are specialized and great at what they do.
This is something that I think we need to get good at. If you have simpler operations, it is going to be much easier for you to accomplish things, to have one person handle more tasks.
4. Invest in equipment and kitchen tools - for instance, in slicing vegetables, we used to slice vegetables with a knife, and have training for it like this is how you slice onions or bell peppers.
As our production go higher and higher as we grow our sales, we realized that this is taking so long.
You simply do the Math, if it takes an hour a day for a team member to do this task, you can replace that task.
You know how much it is costing you per month for this task to get done, a team member hypothetically is making $10 an hour.
So it's taking him one hour day, so 30 days a month, you are paying $300 monthly for this particular task to get done, right?
When you look at this way and analyze, can I buy something for $300 that is going to reduce the amount of time that it takes for this task to get done in one hour or reduce it to 15 minutes?
The answer is yes, and that is a good investment.
That vegetable slicer that I am telling you, we bought it for $250 and that has been tremendously helpful.
Do the Math, and do your due diligence, if it's wiser to have more equipment, then be it. That is what obviously McDonald's has over you and me, they have automation and equipment that is replacing people.
So they can do more with fewer people and having some equipment could be helpful.
5. Let go of C players - for instance, if you need to have 4 people closing at night, try doing the basic Math for this with your eyes closed.
How long does it take for people to do closing?