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Which restaurant CEO made the most in 2018?

Restaurant stocks did poorly last year, and CEOs’ pay followed—for the most part.

The typical restaurant CEO didn’t get much of a raise in 2018. The median pay package for publicly traded restaurant chains’ top executives was $3.7 million last year, according to a Restaurant Business analysis of Securities and Exchange Commission filings. That was roughly the same as it was in 2017, representing an increase of less than half a percent.

That seems right, on the surface. Last year proved to be a tough one for the industry amid weak sales and difficult profits, and a stock market that reacted accordingly. The stock prices of the 38 restaurant chains measured for this piece had a median 3% decline last year.

Taking a deeper look, the story grows more complicated. Pay among CEOs can vary greatly from one year to the next based on stock and options grants, and frequently have little to do with that year’s stock price. And stock awards to new CEOs can influence the numbers. Consider:

The highest-paid restaurant chain CEO didn’t work for the brand for the full year

That would be Brian Niccol, who took over the top spot at Chipotle Mexican Grill in March 2018. He received a total pay package of $33.5 million, more than triple what predecessor Steve Ells received in 2017.

That’s seemingly in line with Chipotle’s historic thinking. The company has always rewarded its chief executives handsomely. In 2014, for instance, Ells and co-CEO Monty Moran each received well over $28 million.

In this instance, the vast majority of Niccol’s pay, $28 million, came in the form of stock and options awards, likely because Chipotle wanted its incoming CEO to have every incentive to get those stock prices up: Before Niccol was hired, Chipotle’s stock had lost more than half its peak value in the previous two years.

That decision has seemingly been rewarded. Chipotle’s is the best performing large-cap restaurant stock this year. As of mid-August, its stock was more than $800 per share, and it has regained its status as one of the hottest properties in any industry.

New CEOs frequently got bigger packages

Niccol was one of several new executives last year, many of whom received sizable pay packages once they took the job.

  • Bernard Acoca, named CEO of El Pollo Loco in May, got a pay package of nearly $3 million, more than quadruple that of his predecessor, Steve Sather.
  • Cheryl Henry, the new CEO of Ruth’s Hospitality Group, got a $6.1 million pay package, double that of her predecessor, Michael O’Donnell.
  • Steve Ritchie received a $5.7 million pay package to take over as CEO of Papa John’s last year for the now completely departed John Schnatter. His pay package was double Schnatter’s, who left the company in July after admitting to making a racial slur. Schnatter had notably turned down raises over the years—he was already the chain’s largest shareholder anyway. Ritchie, his hand-picked successor, was rewarded for guiding Papa John’s through the most difficult year in its history.

Remove the six large restaurant chains that installed new CEOs last year from our calculations, and median pay declined 9.4%—much more in line with the industry’s stock and sales performance.

An outgoing CEO got a nice parting gift

2018 was Daniel Schwartz’s last as the CEO of Burger King owner Restaurant Brands International (RBI). And he went out on top. Schwartz’s pay increased by more than 350% last year, to $18.8 million. That made him the second highest-paid CEO among publicly traded restaurant chains. And it was the biggest increase last year.

Like others, the bulk of that came in the form of stock. Schwartz received $16.4 million in stock last year on top of his salary and other incentives.

Big pay increases don’t always follow stock

It’s notable that Schwartz’s pay increase came during a year in which RBI’s stock price declined by 15%. In fact, few company executives received changes in pay that reflected their stock prices. There are few examples like that of Yum Brands CEO Greg Creed, whose 13% increase in pay (to $14 million) almost exactly reflected the company’s 13% stock price increase last year.

Most stories instead tend to be like that of Scott Crane, whose pay jumped 271% last year as the CEO of Pizza Inn parent company Rave Restaurant Group, despite the company’s 40% stock price decline. Rave, however, is a small cap stock and particularly prone to wild swings in valuation. Rave’s stock has more than tripled this year, but Crane was dismissed as the company’s CEO in July.

And he wasn’t the only one whose fortunes followed this pattern. Lonnie Stout, now former CEO of J. Alexander’s, received $1.5 million last year—40% more than the year before—despite his company’s 15% stock price decrease.

Big chains pay up

In 2017, McDonald’s CEO Steve Easterbrook was the highest-paid CEO among publicly traded restaurant companies. Last year, he took a 27% pay cut, to $15.9 million in salary, stock, options and incentives. That made him the third highest-paid chief executive.

In general, larger restaurant companies pay their executives more, even if that pay doesn’t match up exactly with brand performance. The fourth highest-paid executive was Gene Lee, CEO of Olive Garden owner Darden Restaurants, whose pay rose 150%, to $15.8 million. Yum Brands’ Creed and Starbucks’ Kevin Johnson ($13.4 million, up 17%) both got raises.

The lowest-paid CEO? That would be Andy Wiederhorn, CEO of Fatburger and Ponderosa owner Fat Brands, whose pay was just $254,768.

Some CEOs get extra pay

Sardar Biglari, CEO of investment firm Biglari Holdings—which owns burger chain Steak ‘n Shake as well as a major stake in Cracker Barrel—did not have a great 2018. Stock in his company fell 58%, largely because it created two classes of stock and was ultimately abandoned by some institutional investors as a result. Steak ‘n Shake has also struggled.

As such, Biglari did not receive any bonuses, and his $900,000 salary was only 10% of what he received the year before. He also did not receive any bonus because of his investment work for Biglari Capital Corp., the hedge fund that controls Biglari Holdings’ investments. In 2016, for instance, he received $31.6 million in incentives.

That doesn’t mean Biglari didn’t receive substantial sums from the company he runs. In 2017, Biglari Holdings entered into an agreement with its CEO to pay him a fixed fee under a “services agreement” with his Biglari Enterprises. That agreement pays him $700,000 a month—or $8.4 million for the full year.

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