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A piece of the action

Warning to Managers: This Trade Secret can put serious money in your pocket... if you're willing to work hard, be accountable, and keep your eye on the ball.

Notice to Owners: Talented foodservice managers often have a multitude of job opportunities from which to choose. As a result, making certain that your management team is professionally challenged, properly compensated, and career motivated must be your number one priority. If you're ready to put your money where your mouth is, read on.

The management incentive bonus plan

An integral part of management retention is to instill a sense of pride and ownership in your employees. This is best accomplished through a generous performance-based share-of-the-profits program. Incentive bonuses are integral to maintaining or improving levels of job performance.

Full service restaurants can be a stressful and intense work environment, requiring managers to work long hours and bear many personal sacrifices. As a result, a manager's personal effort has a major impact on a given restaurant's capacity to deliver bottom line profits.

I favor annual bonuses based on a variety of factors, including year end dollar increases in sales and operating income. The first step is to determine what level of sales and operating income performance your managers are expected to deliver for the salaries they are currently being paid. Then develop an incentive profit sharing plan based on the increases in sales and operating income above this baseline.

Why use sales and operating income as the basis for your management incentive plan? First, it is simple and understandable. Second, it emphasizes building new sales, both from a marketing and guest retention point of view. This approach reinforces the fact that hospitality should be a restaurant's number-one priority, and that word-of-mouth advertising from satisfied, loyal customers is still the best form of promotion to build new sales. Third, it ensures that the cost control disciplines necessary to increase overall operating income will be a team effort, involving the kitchen, bar and dining room managers as a group. They begin to work together as a team for a common goal from which they all benefit.

If you'd like to implement a bonus plan in your operation, we've developed a completely customizable Management Incentive Bonus Plan template, including financial worksheets and detailed protocols. It is available through our on-line store.

Read on for additional details and a special offer.

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