Philosophically, you may not have any concerns about paying your employees a higher wage. After all—especially in today’s tight labor market—it’s a great way to attract and retain employees. But, in practice, you may have reservations. It’s easy to see how you would. Increasing pay can initially be substantial and appear to take a lot off your bottom line.
Paying your employees a fair wage, however, is investing in your bottom line. It’s a long game that, if played well, benefits you, your employees and your customers. You may be wondering…
What’s a fair wage for a restaurant employee?
To determine a fair wage, it’s first important to know the law that governs your state. Be sure to look it up, because it can be different from the federal minimum wage. Once you know the minimum wage in your state, your next task will be to determine the minimum and maximum wages that you’re willing to pay.
Start by making a list of the various roles at your restaurant. Then, research the average pay for these roles. You can easily go online and find tools such as PayScale where you can key in the role you want to research and see the range of the pay. Other resources that will give you a bigger breakdown of areas are Glassdoor.com and Salary.com.
With these resources, you can see what companies are paying and begin making the decision of whether you want to pay what everyone else is paying, or if you want to pave the way and offer your employees a wage that workers really want. You’ll benefit from your choice to take the high road.
5 benefits of paying your employees a fair wage
There is no doubt that restaurants paying a fair or even higher rate see huge returns on their investment. When you place value in employees first—and back it with your actions, your employees will usually respond in kind. You’ll see the benefits across different areas of the business:
- Employer brand: When you become an employer who pays competitive wages, your reputation will increase. When you have a positive employer brand, more people will want to work for you, which means you have a greater pick of top talent to fill open roles or increase your staff during seasonal rushes.
- Company culture: Think about what goes through the heads of employees who are not paid well. After looking at their paystubs, they might say, “Why bother?” or “Why should I care?” But when your employees feel valued because they’re making reasonable pay, it’s reflected in their work. They will work harder and be more engaged. Interestingly enough, higher salaries have a way of weeding out bad apples and bad attitudes.
- Turnover: The cost of replacing employees who quit is steep. It’s the time and energy it took to hire that employee, the time and energy it takes to find and hire a new employee, plus the burden it places on the current crew while you seek out new staff members. Consider the savings you would have, even with higher wages, from keeping current employees who are skilled, trained and knowledgeable about the job.
- Customer service: Higher pay has an amazing effect on your employees. When they feel valued, they are happier. And when they are in better spirits, they will smile more at your guests, go out of their way to get orders right or take a moment to make sure your patrons are doing well. This all adds up to a great customer experience.
- Profits: If your employees are happy and giving the best customer care they can, your profits will grow with return business. But profits also grow when other costs decrease, such as mistakes in orders that need corrected or fewer fines over staying clean and up to code.
How McDonald’s and other fast-food restaurants increased profits when they paid a fair salary
Even before the pandemic made it clear to many industries that employees should be paid a fair wage, some restaurants—like McDonald’s, Sonic and Starbucks—were already offering a higher starting wage than their competitors to attract quality employees.
Even back in 2015, McDonald’s made it a point to pay their employees $1 more than their competitors were paying. Because of this, McDonald’s sales have always been above average—and they saw a lower turnover. In-N-Out Burger also paid their employees a higher wage and was rated as a top place to work.
Even now, these restaurants and many more, like Chipotle and Papa John’s, are paving the way by offering a higher pay rate for their employees. They understand the importance of valuing their employees in today’s tight labor market.
When considering if you should bite the bullet and offer a fair and competitive salary, understand that the reward outweighs any initial pain you might experience approving the larger paychecks. In today’s tight job market, it’s important to treat those who are running your business with respect and appreciation. And the best way to accomplish this is by offering a wage that signals just how much you value your team.
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