Key Workforce Trends We're Seeing in the Restaurant Industry

May 3, 2019 Cheryle Kaiser and Grace Lattyak

With unemployment levels at record lows and the economy at full employment, turnover rates continue to be a concern within restaurants. Smaller talent pools give applicants an advantage and puts a bigger focus on retaining workers. But does higher pay really mean less turnover?

Simple answer—Not necessarily. In analyzing the last three years of pay and turnover data, there is little to no correlation between the two. The correlation range of .16 to .22 indicates a very weak relationship. Restaurants are turning to other rewards components to attract and retain restaurant site workers.

Latest Developments in General Manager Pay

Since general managers are linked to the success of a store, it is paramount for restaurants to understand the competitive market and how their general managers influence a store’s success. At an average age of 39, full-time general managers are incentive driven people with 96% of restaurants having general manager bonus plans that are linked to revenue/sales goals. However, 18% of restaurant companies offer more than one incentive plan to further incentivize other strategic goals.

Over the last five years, restaurants have seen an average salary budget increase of 2.9% per year. While the base pay for general managers has been consistent with the salary increase trend, variable pay has been rising at a much higher average rate of 8% per year. Total compensation for general managers has also increased by an average of 4% per year based on a constant company analysis.

Variable pay remains an important rewards component for general managers. Although data shows the trend of increased incentive pay for those receiving a bonus, the actual pay mix has remained consistent since 2013. When designing their general manager variable pay plans, 42% built in a stretch component, on average, of 73%. 68% of these plans are paid out quarterly to motivate managers for a longer period. All in all, 96% of eligible general managers received a payout in 2018.

General Manager Training and Tenure

While pay is important, research also shows that the training and tenure of a general manager directly affects the success of a manager and the turnover rates of the store. In one study done in early 2018, turnover was over 20% when the general manager had a tenure of 0–5 years. After hitting a 10-year tenure, turnover decreased by over 12%. No further reduction in turnover was seen for tenures over 10 years.

Are Your Benefits Evolving with Your Workforce?

As workforce demographics evolve, so do the benefits most valued by employees. Benefits that allow employees to better balance their work and life responsibilities have become particularly popular and are being offered by more companies every year.

Of these, paid parental leave is the fastest growing in recent years driven by high profile companies announcing generous programs. Within retail and food service companies, the prevalence of these programs for salaried employees is also increasing rapidly, however the number of weeks provided has remained constant between two to three weeks. Special paid leave provisions have also received more attention in recent years. For example, among retail and food service companies, 72% provide provide bereavement leave for salaried employees, and 43% provide bereavement leave for hourly employees.

Financial wellbeing is a key priority for employers today. Assistance around educational costs can be extremely valuable to employees. 50% of retail and food service companies provide education reimbursements for salaried employees furthering their education while working. 30% provide these reimbursements for hourly employees. New trends in education assistance include scholarships for dependents and student loans – more companies are expected to implement these in the future.

Amid new benefits emerging, traditional benefits have also evolved. For example, consumer-driven health care plans are much more prevalent now than five years ago. As employees have transitioned to these plans, not all plans are providing employer funding to incent participation in consumer-driven health plans.

To learn more or get in touch with one of our experts, please contact us now.

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