Sanchari Chatterjee7/19/2022What are bonuses? A bonus is an extra payment, benefit, or privilege that is provided to an employee, potential employee, or customer.
Restaurants are not run by owners or servers, they are run by the managers. From administration to employee management, customer satisfaction to timely deliveries, a restaurant manager's job covers it all. She is someone who moves around the length and breadth of the restaurant floor at all times to make sure the business is running smoothly and efficiently. And this is what drives a restaurant, ensures profitability and also relationship building with customers. Ultimately, the goal of any restaurant business is to provide a pleasant and satisfactory dining experience to their patrons. Increased productivity, efficiency and ownership of work can lead to far greater customer satisfaction and thus increase sales, profits and footfall.
Also, the job responsibilities and scale of operations of a restaurant manager varies according to the size of the business. For example, if a manager is overseeing the workings of a chain of restaurants, she is likely to work out of a desk than the restaurant floor. While in case of small, single unit establishments, restaurant managers are more likely to be found at the premises on most days. Irrespective of the size of a restaurant, restaurant managers are like the heart of a business that pumps blood into the system and keeps it running.
Bonuses are incentives that restaurant owners pay their managers as a means to reward their dedication, hard work and overall performance in managing not only the workforce but also the establishment. While you can always give them a pat on the back for a job well done, materialistic incentives help them feel appreciated, seen and rewarded. Bonuses are typically handed out as cash, gifts, tokens or coupons. However, there is a lot of scope to innovate in this area and you can choose to reward your managers any you please.
Bonuses may often seem like additional financial burden on the restaurant's accounts, consider thinking of it as an investment that will help you give an additional boost to your business. Reason? Incentivised and rewarded employees take more ownership of their work and are able to place themselves in the shoes of the business owners. Because their incentives are tied to the profits, sales or number of customer acquired. A survey by 7Shifts had found that those restaurants that rank among the top 25% with the highest employee engagement ratings are 22% more profitable than the rest. There is also significantly lower absenteeism and turnover, thus increased productivity.
There are a number of different ways in which you can make your restaurant managers feel appreciated and rewarded. While the typical ways are of course rewarding them in cash, you can give wings to your creativity and offer the managers different kinds of things on which they will not have to pay taxes as well!
Bonuses based on profits, sales and according to the company's budgets.
You can also start paying bonuses based on other metrics such as cost-cutting measures, better productivity, raising revenues or increased footfall.
Restaurant managers can also earn their incentives with push sales of newly launched products, menu items, bar sales etc.
Apart from cash and profit percentages, you can also think of rewarding your managers with exquisite gifts they would cherish or may have been wanting for a while.
Consider gifting family holidays as rewards to your managers. The family angle will give them an additional push to work towards their goals.
There is no benchmark for bonuses set for restaurant employees and managers and that often leads to lack of clarity or low rewards amounts. However, communication about their performance, expectations, responsibilities can bring more clarity in this area. You should also be able to communicate the exact criteria fulfillments you are looking for, which will help them earn their bonuses and also boost the restaurant's productivity.
For example, a restaurant group in Princeton has said that they have established a bonus system in which the restaurant manager and the executive chef will get 50% bonus based upon achieving the targeted increase in sales and profits. Restaurants also establish other incentive systems for private parties and commission-driven catering projects etc that can drive more growth and sales.
The fact that sharing your restaurant's profits with those who manage and run it on the ground will foster further growth is now well established. Bonuses help restaurant owners align their business goals with that of the managers and operators, who are the driving forces behind the sales and profits. Let us now take a deeper look into the reasons why bonuses should be given a serious thought-
When a restaurant general manager is incentivised, it helps them step into the shoes of the owner and act like them. Managers control purchases, restaurant inventory, develop a communication channel with the vendors, negotiate contracts and prices and also manage and appraise the other team members. A manager is the boss on the ground and if she is incentivised for bringing back results, it is bound to improve productivity of the entire staff. Bonuses can also further encourage a healthy competition among the managers and also boost the morale of the team by rewarding them.
If bonuses are directly tied to sales, profits and other metrics such as increase in customer base, outreach and footfall, your managers will have further encouragement in increasing these numbers to get higher returns for themselves as well. When managers take ownership of running the business efficiently, they take over the responsibility of driving profits and increasing sales. And when this ownership and accountability is there in your team, you can rest assured that it will help them produce better work and also encourage each other to stay ahead in the game. This gives rise to an atmosphere of healthy competition, better work environment and better relations among colleagues since the rewards are directly tied to the sales and do not depend on individual owners.
The restaurant business, like most other service sector industries, is going through a major labor crisis. With Covid-19 derailing the way this industry functioned over the years, restaurants downing shutters overnight, there was a huge unemployment crisis in this labor-intensive sector. Soon, the layoffs were followed by mass resignations in late 2021 and early 2022. By this time, we have all understood how difficult it is to retain talented chefs and managers in this time of crisis. According to CNBC, the restaurant industry has one of the highest turnover rates of 150%. Another study by the Cornell University has said that employee turnover costs hospitality businesses $5,864 per employee. And better employee rewards, engagement and other retention techniques can help restaurants tide over this crisis and work towards profitability.
And in order to retain your talented managers who run the show at your restaurant, attract new talent and win their loyalty, bonuses can be a good initiative to go with. When your hardworking employees feel seen and appreciated, they will work even harder for you and take ownership of their work. Rewarding the best employees for their performance will further encourage others in the team to do even better. This gives rise to healthy competition among colleagues and as a result boost productivity and sales.
According to 7Shifts, 67% of restaurant employees have the desire to receive paid bonuses as recognition for carrying out their tasks efficiently and at times better than others. And employees who get rewarded with bonuses are better engaged and bring better results for their businesses. However, if you are a small business, tying up your profits with employee bonuses may sound like a tricky situation to be in as your profits and sales are already on the lower side. And yet, it is a good idea to consider. Also, when your business is growing from one outlet to another or is seeing increased sales and profits, consider upgrading your bonus plan and re-evaluating key performance indicators (KPIs).
But remember to not make some of the common mistakes while you structure your restaurant manager's bonus plan. Don't plan a structure with unattainable goals that even your best guy cannot achieve. This will only frustrate the team and bring down their performance. Also, try to guarantee the managers and top executives a certain bonus amount that will be rewarded to them irrespective of the metrics. This will attract the brightest talents in the market, who are in high demand. This bonus structure will give you an edge over other owners who may also be trying to recruit certain talents from the pool. Try to give your restaurant managers fair goals and make the rewards scheme transparent.
