The Return of Annual Salary Increases


Rewarding Employees Pays.

An annual salary increase has become a luxury to most Americans, especially those working in hospitality. Just to being employed has become reason enough for gratitude. However, a new study shows signs of light at the end of the tunnel.

A recent survey released by management consulting firm Hay Group and the Chain Restaurant Compensation Association (CRCA), indicates that the restaurant industry may begin reinstating annual salary increases, an employee perk that disappeared with the economy two years ago. Not one of the 39 surveyed CRCA organizations is reporting a complete freeze for the upcoming year.

According to Tom McMullen, Vice President and North American Reward Practice Leader of Hay Group,“Companies are increasingly worried about retention within the restaurant sector. It is comforting to see that chain restaurant companies are planning to provide base salary increases this year. The restaurant industry was hit extremely hard during the recession, and this data shows that chain restaurants have the resources to invest in increasing the base salaries of their staff. Sales and profit have been improving in the industry and, while salary growth has been modest the past couple of years, organizations are feeling more confident in increasing their fixed labor costs.”

The survey was conducted in December 2010 and gathered 2011 budget information. The median projected increase budget was 3.0% for all employee groups. These numbers indicate that the restaurant industry is on par with general industry projections, which are 2.8%, on average.

The study does show a significant jump in increase budgets over last year: approximately 30% of chain restaurant participants last year reported a freeze, bringing the median budget down to 2.0%, which includes organizations not providing increases.

“Companies are increasingly worried about retention within the restaurant sector,” says McMullen. “During the economic recession we asked more of our people – more hours, heavier workloads, while at the same time reducing or eliminating performance-based pay increases. Now that the economics and financials are improving, the industry recognizes the need to reinvest in our people and send a clear message that we appreciate their hard work and loyalty. Base pay increases send a message that we care about our people and value the investment that they have made with their organization. This will be especially important for the hourly employees in the restaurants. Now more than ever, we need an energized and motivated work force to service our customers and drive our sales growth.”

McMullen adds, “After three very difficult years for this industry, including pay cuts, layoffs, benefits reductions and limited pay increases, restaurant organizations recognize that they need to re-engage their work force, and a key part of that re-engagement is in putting their money where their mouth is.”

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