Thinking Outside The Box On Restaurant Labor Costs
Trump High Labor Costs With Creative Incentives
Available labor dollars have rushed out of the kitchen in recent years like a server ducking her sidework duties. Skyrocketing utility bills, staggering leaps in lease payments and rising food costs have all put the squeeze on labor budgets-- and back of the house wages have taken the brunt of the damage.
The jumps in minimum wage, especially in states like Washington State and Oregon, have done the most harm. A high percentage of employees in most food and beverage operations are paid at or near the minimum wage. Money to compensate for increases in the minimum wage have to come from somewhere. And "somewhere" generally means from the only wage earners paid above the minimum in most restaurants; the cooks.
But if you pay less, it makes it hard to attract quality performers. For many KMs and head chefs, that means coping with less experienced new-hires, or settling for the dregs among the seasoned veterans. Others compensate by reducing the number of bodies while increasing the amount of hours they themselves work on the line.
Both approaches negatively impact product quality, morale, employee retention, and the overall quality of the work environment. And you already know what that can mean for the bottom line.
You can't change realities like cost and wage increases. But you can take a more proactive approach by redefining what we define as "compensation."
Consider how popular the classic employee perk of free enrollment in membership warehouse club stores-- like Costco or Sam's Club-- have proven to be. Employees tend to regard this prized perk to be an act of generosity on the part of the operator. Yet, at only $40 to $60 per year, it's a benefit that cost an operation far less than a raise in pay.
Then there is the traditional restaurant employee perk of a discount on meals. This is so common that it's often automatically assumed it will be offered. But employees truly do regard this highly; especially if it's extended to family members as well. It's popular with operators too, because it's comparatively cheap to implement.
Given the low cost, meal discount programs offer lots of room for expanding upon. Many operators extend the discount, or a slightly reduced percentage, for employee use when they visit other stores within their chain. If possible, include employees' families in the plan. Just make sure to put caps on the party size, or impose a monthly budget for each member of your crew. Reward employees who stay with the company by building in budget increases, perhaps with each year or two served.
Studies show that employees give perks like these a personal and emotional value that ranks higher than their actual dollar value. That means a bigger bang for your buck. And once you get used to thinking "outside the box," you'll begin to recognize the possibilities for creative employee compensation that are all around you.
For instance:
1) Cooking classes. Many kitchen employees would love the opportunity to learn the in's and out's of cuisines they're not familiar with. Try offering a quarterly or half-yearly budget for local classes.
2) Reduce their grocery bills. Make a list of common items families buy at the grocery store. Offer these for purchase from your supplier. It takes a bit of paperwork and coordination-- but remember: this replaces wage increases that you can't afford. The list limits the options, making it easier to control.
3) Gift certificates (earned per quarter or half-yearly) for Ticketmaster or local professional sporting events.
4) Gift certificates for music downloads; or cover the cost of a music subscription service. Yahoo, for instance, offers unlimited subscription downloads for under $7 a month, or under $60 if you pay for a year.
5) UPS delivery budget. Every December schedule a week's worth of pick-ups by United Parcel Service (or delivery service of your choice). Invite your crew to bring in any gift packages they need to send out, and pick up a predetermined dollar amount of each of their total postage costs.
6) Gym memberships. Pay a set dollar amount. Consider approaching local gyms with a barter offer.
7) Hotel discounts for weekend getaways. Set up a yearly budget. You'll sure score points with the spouses!
Those are just a few of the endless possibilities. Perks like these are valued, and can help your recruiting effort, as well as encourage employee retention. But always remember: If you offer your team members a great work environment, one in which their hard work is acknowledged and appreciated, that is what they'll prize the most.
Research shows that most people will pass up a higher wage at a company with a reputation as a bad place to work, for one that is known as a workplace that is stable, encourages advancement within the company, recognizes and rewards accomplishments, and is upfront when evaluating job performance.
That's your most valuable ace-in-the-hole.
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