Restaurateurs are finding ways to offer benefits and perks despite the unrelenting downturn, runaway unemployment and skyrocketing health care costs.
While some operators say they have been forced to cut back on programs such as 401(k) and health care plans, they nevertheless are exploring other benefits like cost-effective wellness programs and deferred compensation programs, which remain crucial to recruiting and retention.
“There are a lot more employees available now because the unemployment is so high, but we’re still looking for the best people, and the best people want benefits,” says Judy Irwin, vice president of human resources for Golden Corral Corp., the 480-plus-unit grill buffet chain based in Raleigh, N.C.
The country’s unemployment reached 9.8 percent in September, and since the start of the recession in December 2007, 15.1 million people have lost their jobs.
But offering benefits has become more challenging. For example, the expense of health care plans in the United States reportedly is expected to outpace salary increases in 2010.
According to the 2009 Chain Restaurant Executive Compensation Study, restaurant operators are revising plans to lower costs and still find ways to offer benefits that will reward, retain and attract good employees and top executives.
The study, conducted by HVS Compensation Services, in conjunction with Nation’s Restaurant News, polled representatives from 78 publicly and privately held multiunit chains. The study measures the compensation and benefits data for 22 leadership positions.
Nearly two-thirds of restaurant companies offer perks such as car allowances to their senior executives. A third have altered 401(k) plans, most often by discontinuing or lowering the company contribution. More than half provide a deferred compensation program for highly paid executives.
While companies say they are maintaining health benefit plans, almost a quarter made changes to those plans such as raising premiums and deductibles.
Health benefits are a major concern for operators, not only because of rising costs, but also because operators are worried about how Washington will reform the health care system, says Wendy Harkness, vice president of Checkers Drive-In Restaurants in Tampa, Fla., and president of the Chain Restaurant Compensation Association, an organization with more than 100 member companies.
“No one knows what [health reform] is going to do,” Harkness says. “People have gone away from planning benefits strategically to try to ensure against heavy losses.”
The restaurant industry has been following other industries in sharing the cost of health care with employees by raising their premiums and deductibles. Nearly a quarter of the respondents in the executive compensation study reported changing plans for their senior executives, either by raising employee premiums and deductibles, or by shifting to new providers and programs.
Shopping around and tweaking plans have allowed some operators to hold the line and not pass increases on to employees.
Denver-based Qdoba Mexican Grill, a 509-unit fast-casual chain that is a subsidiary of Jack in the Box Inc., is not raising premiums for its employers, says Mike Speck, vice president of human resources and training.
“I know some are reducing or eliminating [health care plans] altogether, but we had an objective to maintain coverage and maintain the premiums,” Speck says. “We have to take care of our people. It’s the right thing to do.”
Qdoba’s health care plan includes a wellness component to help reduce costs, and other operators are using or considering similar changes.
Golden Corral is weighing plans that would reduce employee costs if they participate in health screening and lower their cholesterol, blood pressure and/or weight, Irwin says.
“We’re working really hard not to shift costs to employees,” she says. “Last year we were able to stay flat. I’m keeping my fingers crossed, and it’s looking like we will be flat again this year.”
Retirement plans are another area restaurant companies have been looking to save costs. The executive compensation study shows 18 percent of companies discontinued their company match to employees’ 401(k) plans and 7 percent reduced their match. About half of the chains offer deferred compensation to their highly compensated executives.
