We work in an industry built on the world’s oldest incentive scheme...tipping. You please the customer and the customer will reward you with a little something extra; it’s been that way all over the world for as long as catering and hospitality have existed.

Yet, when it comes to running a restaurant business, many owners and managers still have a lot to learn about incentivizing their workforce, in fact many may not see any need at all to offer staff a carrot when they are paid a good fixed rate.

You, as the business owner, are automatically incentivized because your success goes straight into your pocket. But you may easily forget that employees are not driven in the same way, so you must build from scratch an incentive structure that will keep them all motivated to strive for the same target.

In this article, we hope you will find everything you need to create an effective incentive program for your business, based on the experience of establish businesses of all sizes.

But don’t forget – just as your business is unique, then there is no single rule book on how to create an incentive program. Just take a look at all the facts and ideas you see here then it should soon become clear which elements are right for you.

Don’t Reward Them To Run You Down

Sounds obvious, doesn’t it? But just think for a moment: if you reward a chef or kitchen manager for getting food costs down, they may succeed magnificently…by buying lower spec’ ingredients or, even worse, skimping on portion size. Be in no doubt, your customers will notice and your business will suffer. In the same way, incentivize a front-of-house manager to keep staff costs down and they may be tempted to spread those waiters a little too thinly, perhaps by ‘making do’ when someone is off sick or on leave.

Any fool can do anything a bit cheaper – but that would be missing the point. It would be all too easy to fall into this trap and build a reward structure that allows self-interest to prevail at the expense of the business.

The right rewards

In any incentive scheme, you must of course see the whole picture. But, even more importantly, your staff must see it too. If each of them is motivated to be a part of the overall success – and if they can clearly see their own part in that success – only then are you all working on the same side and only then is your incentive plan performing as it should. That chef will start cutting costs by eliminating waste and sourcing food more carefully, the FOH manager will put more thought into drawing up staff rosters to match estimated demand.

Plan for growth

Your ultimate goal in any incentive program is to take it all the way to your upper management so that they can be left to run it without you altogether – not because you want to do less but because you want to grow. You can run one restaurant but when you are ready to open new units, you cannot be in two, three or even more places at once. So the principle of incentives is equally valuable at every employee level from the floor to upper management.

Here’s how

Before we talk numbers, let’s lay down some basic principles:

• 1. Transparency and involvement: Make sure that your reward system is easy to understand, so that they can relate to it and can see that it is fair to them and to their colleagues around them. Also be prepared to listen if anyone thinks it might be unfair or maybe has some constructive thoughts on how it could be improved.
• 2. Quick feedback: Base your staff incentives on short reporting periods, perhaps on monthly or quarterly results – and definitely less than annual – and show them the results while they are fresh. This way, they can directly relate the payment to their own actions and efforts while they are fresh in their minds. Take too long to report results or set them over too long a period and the value of the bonus will be quite meaningless to them.
• 3. Top and bottom line: As we have already mentioned, it isn’t all about cutting costs. Build your bonus scheme around rewarding improved sales as well as reduced outgoings…and never reduce outgoings at the expense of quality.
• 4. Keep watch: Hold regular meetings to assess progress and identify areas that could be improved. Also think about reviewing the entire structure now and again, perhaps annually or even six-monthly, and be prepared to change your terms or goals as circumstances demand.
• 5. Keep it real: Most of all, set targets that are achievable and your staff will try to achieve them. Set them too high and they will lose interest.
• 6. Money isn’t everything: There are lots of ways you can reward deserving staff that don’t cost a fortune but will still be appreciated. How about tickets to the movies, the theatre or the big match. You could even save more money and arrange a swap with the event proprietors…maybe dinner for two would prove a handsome prize in their own incentive scheme.
• 7. It isn’t the only performance indicator either. Don’t just reward a good bottom line; consider putting in a ‘mystery shopper’ to report back on who and what impressed them. Or of course, hygiene inspections – less glamorous perhaps but a vital factor in your business.
• 8. Consider involving upper management even more by rewarding them with a stake in the company! It can be very effective but remember you are changing the status of your business set-up in a very fundamental – and irreversible – way so give it very careful thought before considering this.

The figures

Any effective bonus structure needs a solid foundation of numbers and percentages. This may not be the same for every business and you may see areas where you would want to introduce variants or perhaps introduce changes after trying it out.

Firstly, it makes sense to base your overall reward program on your Net Operating Profit. You may also want to reward anyone on how they spend your money, for example those procuring food or hiring labor.

Starting at the top, let’s say you set aside a maximum 5% of NOP for your manager and assistant manager on a 60/40 split, then calculate their actual bonus in any period as a proportion of that, based on Key Performance Indicators. Any rewards further down the staff hierarchy can be added onto this in a predetermined proportion.

You may want to build-in factor of savings in prime costs such as food and labor, by calculating a norm, say 66%, and rewarding in direct proportion to savings on that figure. Perhaps 20-30% would be usual here and again you can choose to share that between managers and others in whatever proportion you see fit. Some favor a straight 50/50 but you will know best what works for you and your people.

So, that’s all the rules and hard numbers out of the way. Now this is probably a good time to remind ourselves that there is a whole armory of incentives that are sure to work every time…but won’t even cost you a cent! And it is all down to how you behave and relate to your people. If there’s a spill to clean…be the first one there with the mop and bucket. If an employee is struggling with something – even if it’s just opening a jar – get in there and help. If something is troubling them…listen.

And, most important of all, if they are doing something right…thank them…and be sure to smile at them when you do!