How Offering Employee Benefits Can Improve Staff Retention in Your Restaurant

By: Liz Schroeter-Courtney

8 Minute Read

Aug 27, 2019

Employee Benefits

The cost of healthcare is a top concern for US citizens. More than half of Americans under the age of 65 — about 158 million people — get their health insurance through an employer. Sadly, that figure is much lower for restaurant workers: A survey by Restaurant Opportunities Centers United found that almost nine out of ten people who work in the restaurant industry lack paid sick days (87.7%) and health insurance from their employer (89.7%). The study added, “As a result of the fact that those who work in the industry cannot afford to take care of themselves or stay home when they are sick, two-thirds of them (63.6%) report working sick, unnecessarily placing co-workers and diners at risk.”

As workers across many industries lay on the pressure for both employers and public policy-makers to introduce reforms to a healthcare system that’s literally making people sick, some businesses are creating employee benefit programs that provide quality healthcare options for the people without whom the business could not thrive. These forward-thinking business leaders are setting a new standard for a healthy, sustainable American workforce. Read on to hear about several restaurateurs who are raising the bar when it comes to employee benefits.

Read More: The Ultimate Guide to Restaurant Employee Benefits

Employee Benefits are a Necessity, Not a Nice-to-Have

At this point, you’re likely well aware that the restaurant industry has a staff retention problem. 

Though a variety of factors come into play when trying to get at the root cause of employee turnover in the restaurant sector, high on the list is the lack of emphasis on personal and professional well-being

Alleviating stressors outside of the workplace, whether that’s worrying about career longevity or how to pay for medical bills, reduces distractions for your employees, helping them maintain a laser focus on delivering memorable dining experiences for every guest when they’re out on the floor or on the line.

Providing staff with meaningful employee benefits – like paid time off and medical insurance –  isn’t just the right thing to do, it’s also a sustainable, profitable business model that boasts high employee retention.

Read More: How to Choose the Right Management Model for Your Restaurant

How Real Restaurants Approach Offering Employee Benefits 

Offering employee benefits can be costly, let’s not ignore that. It can be especially difficult to find room in the budget when you’re just starting out or your restaurant is experiencing a bout of bad financial health. It’s all the more common that businesses with hourly employees will strategically avoid providing their staff with enough shifts to hit the hours-worked threshold that legally requires the employer to offer medical or paid leave benefits. That’s not a good recipe for employee loyalty. In fact, it encourages turnover.

Whether you’re starting a new venture or planning for the long-term health and success of your restaurant, it’s worth thinking of an employee benefits plan as a need-to-have, not a nice-to-have. Think of it as an investment in the future of your business and your community. 

If you’re looking for a roadmap for how to create a workplace that values employees’ health and wellbeing, the B Corp community is a great place to start. Formed in 2007, the B Corporation certification is a way for businesses to commit to standards that benefit all stakeholders – consumers, workers, business owners, and shareholders. 

Today there are nearly 3,000 B Corps across the globe from a wide array of industries. It includes successful restaurants like Luke’s Lobster, a growing seafood chain with 28 locations in the US. Luke’s offers medical, dental, and vision coverage to its full-time managers, as well as to full-time (30+ hours/week) teammates after one year of employment. They also provide things like pre-tax commuter benefits, 401k with a 50% match, and flexible scheduling.

Bamboo Sushi in Portland, Oregon became the world’s first certified sustainable sushi restaurant in 2008 and was one of the first hospitality businesses to become a certified B Corp. They take their responsibility as a business very seriously and think of themselves as a catalyst for change. Their website explains, “We make mindful business decisions that connect environmental impact, the prosperity of our team members and purveyors, as well as the enrichment of the communities we live in.” In practice, this includes competitive medical, dental, and vision benefits for full-time team members, perks like wireless carrier discounts and weekly pay, and career path training.

Food & Wine offers a profile of great restaurants to work for that gives a glimpse into how several successful restaurateurs have made employee benefits a priority that’s paying off in spades. 

Seasoned chef-owner Justin Carlisle took quality of life into serious consideration when opening his twenty-seat tasting menu restaurant Ardent in Milwaukee, WI. He walked Food & Wine through his thought process and the important questions he considered before opening, like, “What’s the minimum I need to be open, and be able to pay the bills, and live without resorting back to the culture that I left?” By not over-extending himself or his staff, Carlisle is able to offer his employees set schedules, living wages and pooled tips, cross-training between front and back of house, and a month of paid parental leave.

Martha Hoover of Patachou Inc., a restaurant group in Indianapolis with 350 employees, has managed to offer paid time off, health insurance, and parental leave to her full-time staff. “My goal is to keep good people in my company,” Hoover told Food & Wine. She also happily reports that her retention rate is a third higher than the industry average.

And Thai Fresh, an Austin restaurant with 48 employees, shows that positive change is possible, with a little patience:

After eight years of running this deli and restaurant, Jam Sanitchat and Bruce Barnes were dismayed by the pay disparity between kitchen staff and servers. So in 2016, they tried a base living wage for everyone, banned tips, and hiked prices 20 percent. Sanitchat, the chef, accurately predicted she’d lose 15 percent of her profits—but sales bounced back in a year, and turnover practically disappeared. “The environment is totally changed,” she says. The policy has also allowed her to add health insurance for full-timers and paid time off for everyone. “I don’t want to go back; it’s working for me,” says Sanitchat.

Read More: Ryan Egozi of SuViche Hospitality Group on Keeping Employees and Customers Happy

How to Find Room in the Budget to Offer Employee Benefits

Even if you’re committed to the idea of employee benefits, rolling out a wide-scale program across a number of benefits-related categories may not be financially feasible right off the bat, and that’s okay. Start small and ease into employee benefits by offering low- or no-cost employee perks that help improve the day-to-day experience and wellbeing of your workers. 

Next, understand that employee benefits will make employee pay and benefits a larger share of your overall cost of doing business. As the Thai Fresh example illustrates, a significant shift in your business model to make employee benefits a reality for your restaurant staff may cause a short-term dip in profitability. To make the numbers work, consider increasing your menu prices, adding a surcharge, or reexamining your controllable costs to find additional budget.

If you do decide increasing menu prices or adding a surcharge makes the most sense, be transparent and communicate the reasons behind the change to your guests. Guests may initially be disgruntled to see the price of their favorite dish has increased, but if they see that it’s in order for their favorite bartender to get health insurance, they’ll happily oblige. 

If you’re hesitant to offer benefits because your restaurant has had a problem retaining staff and you don’t want to see your investment walk out the door, bake an incentive into your employee benefits program. Let restaurant staff accrue time off based on the number of hours they work, or set up benefits that kick in once a staff member has reached their one-year anniversary. 

For small- to medium-sized businesses, joining a professional employer organization (or PEO) can help make providing benefits more affordable. These entities help manage all sorts of HR activities, from payroll to tax filing to health benefits, by entering a co-employment arrangement where the PEO becomes the employer of record for tax purposes. It also relieves a small business’s management team from lots of time-consuming HR tasks.

Read More: A History of American Restaurants: The Changing Face of the Restaurant Workforce

Benefits That Benefit All 

Providing employees with benefits that make their lives more comfortable is an investment and not every business may be able to afford to provide health care and paid leave without strategic planning, cost (or profit) cutting, or higher menu prices. But if it can be done, it's worth the effort: Many successful restaurateurs have shown offering employee benefits pays off in worker retention, the ability to attract the best talent, and a reputation that can cement the business’s place in its community for many years to come.

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