6 Tips to Give Good Compensation and Benefits to Restaurant Employees
Updated: Jun 21
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?
Let's say, for example, it takes 2 hours to close from 9-11 PM and you have 4 people for that shift. So 4 people, $10 an hour each, that's an average of $80 a night that you are paying for somebody to close the restaurant.
Are you able to do that task with 3 people instead of 4? Can you get 3 fast people, and then pay them more?
This is why you need to let go of C players. You need to have conversations with your people you hire and say, "If you can do this task within an hour and a half, I will be happy to give you a raise, otherwise I need someone else on the clock to do this and I won't be able to give you a raise".
So letting go of C players and having more A-players is going to be remarkably helpful so you can pay them more because they do better.
6. Conduct pulse meetings very frequently - when you do this, ask specific questions to get specific answers.
For example, if you simply ask them, are you happy working here? They maybe are just going to say yes and that means nothing.
In fact, one of the things you might not even know why people quit is because what they tell you may not be the truth.
Because sometimes, they don't even know why they no longer want to work for you.
One of the things that we do all the time is we ask questions that start with "On a scale of 1 to 10".
For instance, "How happy are you with your hourly rate?" versus "On a scale of 1 to 10, how happy are you with your hourly rate?".
The latter gives you more tangible information that you can work with and take to the next level.
It's good when they answer 7, 9 or 10. But what if someone gives a 5? It is actually great to get things open so you can ask further questions that can lead to another point like measuring their skills.
People's skills are not like whether someone is fast or slow if it's not in a measurable way.
For instance, Susan's current hourly rate is $10 and she's asking to be paid $12 like John. Then you explain to her that it takes John to stretch 8 16" pizza in a minute and a half, his rate of speed is within the excellent scale that's why he is making $12 an hour, on the other hand, it takes her 3 minutes to do the same task.
We do time trials in our restaurant to measure the skills of our staff in terms of their speed. We also have competitions all the time with our people and we document their speed.
Then when it comes to them saying, "Oh, I am not being paid fairly", we can be clear and say "Susan, I'll be happy to help you out in getting you to become faster so I can pay you like John, however, in the state where you at right now, I am not able to pay you more because your skills are not where it needs to be."
This way, people can understand exactly what they need to do to get more money. So Susan now is not an A player like John, but my goal as a leader is to get her to become an A player.
You must be constantly hiring employees, regularly documenting their performances, and sadly, continually firing people.
Your people play an indispensable role in your company's success so we must always find ways of keeping them, especially the good ones. Providing them with good compensation and benefits can definitely retain the best employees.
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