Hey, crazy restaurant people. Today's video, we're going to talk about
the do's and don'ts of employee incentive programs,
Hey, everybody. Ryan Gromfin here, author, speaker, chef, restaurateur,
founder of therestaurantboss.comclickbacon.com,
scalemyrestaurant.com and author of make it happen,
either there or there, I don't know.
Anyways, I want to welcome you to this week's video and this is another
user or a member submitted question which I love.
And the question is basically about bonus programs, incentive programs. I get
this question a lot. So, let's create a place that we can send everybody to
when they have questions about bonus programs. First thing I want to say about
bonus programs or incentive programs is do it. They're great.
One of the biggest challenges that we're having right now with staffing with team members
with finding team members is that the younger generation today wants to
be a part of something. They want ownership. They want to
feel like they're part of something that matters. And so,
by offering incentive, by offering bonuses,
by offering maybe some form of profit sharing,
we can bring people into it a little more.
Give them reasons to work. So, the thing is I do love bonuses.
I do love incentive programs.
But here's a couple of buts, here's a couple of don'ts.
You can't just incentivize them on one area,
like you can't just get as simple as I want a lower food cost, so we're going to
create a food cost bonus program.
And here's one of the reasons why is we can lower your food cost.
You bring me into your restaurant and you bonus me on food cost,
I will get your food cost low. I will buy
less quality ingredients. I will get stingy on portions.
I will reuse product I shouldn't use now.
I would never do that because I have higher standards than that but I'm just saying,
there are ways that a good chef can lower your food costs.
But at what cost? You're going to lose customers, you're going to get bad reviews.
Your food quality is going to suffer.
You may not see it at first but it'll come later. So,
don't ever just bonus on food costs or labor costs.
I'm going to share with you
how I create a bonus and why I create that structure here in a second.
Another don't is
don't create a bonus or an incentive without a budget.
Like you can't just give them a piece of sales
without having a sales budget. And then we're gonna bonus them
or on profits I should say, then we'll bonus them on
did they outperform what's expected.
Because if all they're doing is just sharing in it
whether they grow it or don't grow it, they're gonna get a piece of it anyways.
And then the other is
if they're just doing their job, if they're just doing what's expected of them and not
more, then that's the job. That's what the salary is for.
The idea of an incentive or a bonus is to outperform.
Another big don't is making bonuses
subjective, they should be measurable.
So, do make your bonus measurable, black and white.
Your team members should know at any given moment in time
what their bonus is, maybe not daily but at least monthly
if you're bonusing quarterly or if you're bonusing monthly, if you're bonusing yearly.
By the end of every month, they should know
what their bonus was for, that period.
If they're getting it and what it was.
It shouldn't be something that they're just waiting to the end of the year
and then wondering if they got bonus or not.
Or it's so subjective that the owner just decides not to bonus
even though they feel they deserve it. So, it has to be measurable.
Now I have created bonus programs for restaurants where like 80% is measurable
and 20% is not. But generally speaking,
make as much of your bonus program measurable,
so those are some quick do's and don'ts. But
here's the big one. Here's how I set up the general bonus program.
I'm going to give you another kind of more creative idea
and some suggestions around that. Generally speaking,
we create bonus programs based on
IFO, income from operations, or
what we like to call it at the restaurant boss, RCP,
restaurant controllable profit. It's the same thing
just depends what you like to call it. Basically, this is the profit
after the controllables, so after cost of goods
sold, after labor,
after direct operating expenses, you're left with some money.
This is generally in the 30% range obviously depending on how well the restaurant operates,
could be more or less. So, if your restaurant did a million dollars in sales,
you're gonna have a IFO income from operations of roughly thirty percent
or three hundred thousand dollars. Again, those are just general numbers.
Then we bonus based on that
above budget, so again I'm just using the example.
If budget is 30%, and then they come in at,
your manager does such a great job that they come in at
32% on that million dollars in sales.
That's an extra 20,000
that's twenty thousand dollars of extra controllable profit
above what was budgeted for. Then you can do a profit share
on that. So, maybe it's a 50/50 split, maybe it's a 70/30
split, maybe it's a 60/40 split.
I have also created waterfalls where it's like
80/20 for the first two percent.
And then 60/40 or 70/30 for the next two percent.
And then anything over five percent is 50/50 because wow,
if your team
increase your controllable profits by 5 in a year,
they deserve a big piece of that. Because they worked hard at it.
Assuming you set up your budget properly and this is where the challenges come in.
We're not going to talk today about how to do this, how to measure it.
You should be using a program like clickBacon which would make something like this,
very easy for you to do. You can learn more at clickBacon.com.
There's other methods to do this. But today is just more about the general theory of
incentive programs do's and don'ts so that's a general program. Now what I like about that is
it includes everything except for the non-controllables.
Non-controllables like is your owner paying for their cell phone
through the business, is your owner
paying for vacations through the business, is your owner buying cars through the business,
certain marketing things, certain discount programs,
certain expenses that your owner
or you might be incurring
that the manager can't really change. Right.
That's not controllable. But what the manager can control is
scheduling, guest satisfaction,
purchasing,
maintenance, right, under direct operating expenses. A lot of times we're going to
include maintenance we're going to include small wares and some equipment.
So, if we're not maintaining equipment well and it's breaking and we're having to buy it
or we're having to repair it often, that's going to affect their profitability.
If you need to paint a wall, maintenance,
and you just call a painter to have them come in and paint the wall,
maybe we could have had someone on our team do that. Maybe we could have gone to home depot
and bought the paint and paid them for a couple hours of work to paint
maybe, maybe not. I'm just throwing that out there.
If a manager is incentivized
on how well the food is going out,
how satisfied your guests are, and then how they're controlling their expenses, that all factors into that.
If we only do food costs or only do labor costs, we're ignoring
other really important things.
The last thing I wanted to add here is we just kind of talk about generally incentive programs do's and don'ts
is a more creative method that
I've talked to some owners who are doing this.
But in full disclosure, I have a rule here at The Restaurant Boss that
I don't teach anything unless it is a proven strategy that I know
will work well for you or for most restaurants.
So, I don't teach this method. I just want full disclosure because
I haven't tested it personally with clients.
I would love to test this. I think it's a great idea
and I think it's going to work well if you're doing something like this or if you want
to do something like this. Please reach out to me in the comments.
I'd love to connect with you and talk about it more, either how you can do it in your restaurant
and provide me some of that feedback, so I know.
Or maybe you're already doing this and you can provide me feedback. But
there are some restaurants out there that are looking at or doing
daily budgeting with daily performance bonuses.
So, maybe it's weekly, maybe it's daily.
It's actually easier daily than weekly because
when I explain how this works, I think you'll see that.
Let's assume that you budget again, it's all based on budget.
Let's assume that you budget your day to do
four thousand dollars, today a Monday, you're gonna do four thousand dollars in sales.
Well, if you do five thousand dollars in sales,
your team today worked harder
than what we expected.
We didn't bring in enough people for five thousand dollars, so they worked harder.
We maybe started running out of food because we only prepped for four thousand, we did five thousand.
So, they really kicked it into gear to get that five thousand dollars of sales out.
Somaybe you carve out
five percent of the difference or ten percent of the difference
to put into a bucket.
And then share it amongst the people on your team.
What I love about this is they get the daily reward, the daily satisfaction for
enhancing the guest experience, offering better drinks,
making sure that we're getting those extra appetizers on the table those extra desserts
because if they're increasing sales above budget, right.
They're getting that daily bonus for that. They're feeling like they're a part of the team.
They want to make sure their station is clean, the kitchen is fully prepped and everything.
What I also love about this is
I've talked to some people who use this as a
performance improvement bonus as well, meaning
if you come in late today,
you can't participate in the bonus if there's a bonus.
If you've
failed to do a project that you were assigned to, you can't participate in the next
week's bonuses for those seven days or something like that.
If someone no call no shows,
which if they no call no show, they should be terminated from your restaurant instantly. But if they no call no show,
they might be suspended from daily bonuses for a week or for a month.
Or if you're in your first 90 days because you're training,
you can't participate in bonuses. So, then that's the incentive to get fully trained
or maybe it's 90 days or when you pass all of these tests and you're fully trained,
you can't participate in the bonus structure until then.
So, it gives a lot of instant gratification.
And again, this is something I would love to implement if I operate at a restaurant
right now today,
this is exactly what I'd be doing in my restaurant, and I'd be able to give you the data.
But I don't. I'm a full-time coach, a full-time consultant.
I work with 20-25 restaurants all over the world at any given time
and it's something that
I'm getting close to getting some of my clients to want to do.
They just haven't pulled the trigger on it and as soon as they do, I'll give you an update.
But if you're doing something like this or if you want to,
please let me know. I'd love to work with you and help you design this program
program and get the data and the feedback.
So then I can come out and say yes, do this it works and here's how you do it.
I hope you enjoyed this week's content. I look forward to bringing you another great video just like
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