Even as the recession battered the U.S. economy over the past several years, multiunit restaurant managers and general managers in some smaller markets were enjoying double-digit-percentage pay hikes, according to a survey by the Chain Restaurant Compensation Association, or CRCA, and the Hay Group, a human resources consulting firm.
The CRCA has a membership of more than 90 companies representing 164 restaurant concepts. Member companies and franchisee members have gross annual revenues of $50 million or more.
Operators, recruiters and analysts attribute the strong pay increases to several factors, including more competitive labor pools in smaller communities; the entrance of large, higher-paying chains into lesser markets; and the need to retain high-performing managers in challenging economic times.
The survey sampled more than 320 metropolitan areas and found the national base-pay median for first-level multiunit managers — who, according to the Hay Group, oversee between two and seven locations, depending on the organization’s size and unit complexity/proximity — increased 6 percent between 2008 and 2010. In several communities, wage growth exceeded 15 percent.
For general managers, the national base-pay median rose 4.5 percent in those years, but in some cities, managers’ pay jumped by more than 20 percent.
Double-digit-percentage pay increases for general managers occurred in such places as Hamilton, Ohio; Little Rock, Ark.; Toledo Ohio; Orlando, Fla.; Grand Forks, N.D.; Lake Charles, La.; Appleton/Oshkosh, Wis.; and Lubbock, Texas. Many of the top locations for pay increases had populations of less than 500,000.
According to the survey, the median total compensation for a first-level multiunit manager was $93,330 in 2010. Median compensation salary for a general manager was $59,000. Total compensation includes base pay and bonuses.
“Pay in larger markets like Los Angeles, New York and Chicago grew significantly prior to the recession, and while there is a larger talent pool from which to draw in these cities, these markets are likely not able to bear substantial jumps in pay where labor costs have already put pressure on unit profitability,” said Dana Rawlins, CRCA survey director and senior compensation analyst for Cracker Barrel Old Country Store Inc., a family-dining restaurant chain based in Lebanon, Tenn.
Smaller markets can be more challenging for corporate recruiters, said Alexandra Schmit, director of recruiting for Rock Bottom Restaurants in Louisville, Colo. Rock Bottom merged last year with Chattanooga, Tenn.-based Gordon Biersch Restaurants to create CraftWorks Restaurants and Breweries Inc.
“Ideally, we like to promote from within, but if we only have one unit there and a set number of managers to pull from, if someone is not ready, we will have to look to see who is willing to relocate, and then go to external candidates,” said Schmit, who recently promoted a general manager to a regional manager in Cincinnati.
Smaller markets with smaller populations often have fewer job applicants. Also, employee turnover has reportedly been on the decline for the past two years as workers were less willing to quit and take a chance on finding other jobs during the recession. The national unemployment rate, which was as high as 10.1 percent in October 2009, fell to 9.4 percent in December 2010 and 9 percent in January.
“I think people have tended to stay where they are because they were nervous about the economy,” said Kelly Piuma, a general manager for Red Robin Gourmet Burgers in Myrtle Beach, S.C., a seaside town of nearly 32,000 people. “Application flow has slowed down.”
Piuma has lived in the Myrtle Beach area for more than a dozen years. She left an area director’s position with another casual dining concept to take the general manager’s job when Greenwood Village, Colo.-based Red Robin came to Myrtle Beach in 2008. Her connections helped her hire two assistant managers from the community.
Compensation executives noted that if a concept does not have internal candidates prepared for promotion and outside candidates must be recruited, it can drive up compensation costs. A concept also may be entering a smaller market for the first time and may need to bring in its own managers.
“When chains open a restaurant in smaller markets, a common practice is to move in an experienced manager, presumably from a higher-wage area,” said Liz Allison, director of compensation for Dallas-based Brinker International Inc. and a past president of the CRCA.
Even with high national unemployment and low employee turnover, restaurant companies intent on retaining good managers have had to keep pay competitive, said Tom McMullen, vice president and U.S. reward practice leader for the Philadelphia-based Hay Group.
“In the current economy, every restaurant dollar matters more than ever,” McMullen said. “Having talented people in key management roles is critical throughout the organization, as this talent drives performance.”
To retain good managers, even in a recession, compensation has to be clearly defined; increases should be practical and obtainable, said Keith Chambers, chief operating officer and franchise partner for Bagshaw Enterprises, a Yum! Brands Inc. franchisee based in Hillsboro, Ohio. Bagshaw operates 32 restaurants, including KFC, Taco Bell and Long John Silver’s throughout the Midwest, in suburban communities and smaller markets.
Managers need to know how they are being compensated and that how they rank is based on such performance metrics as food and labor costs, sales increase, customer satisfaction and team member retention, he said.
“What’s important is to have compensation that has no smoke and mirrors, but is straightforward,” Chambers said. “The salary structure is clear; it’s based on tenure, sales volume. People understand. If sales go down, they know why their salary may go down.” n
Top locations for multiunit managers’* pay growth:
Hamilton, Ohio 36%
Little Rock, Ark. 33
Orlando, Fla. 24
Toledo, Ohio 24
Gary, Ind. 22
McAllen, Texas 21
Bakersfield, Calif. 19
Louisville, Ky. 18
Modesto, Calif. 17
Trenton, N.J. 16
* The multiunit manager position oversees two to seven locations, depending on the organization’s size and unit complexity/proximity.
Top locations for general managers’ pay growth:
Grand Forks, N.D. 35%
Lake Charles, La. 34
Monroe, La. 34
Appleton/Oshkosh, Wis. 32
Kenosha, Wis. 29
Columbus, Ga. 28
Lubbock, Texas 26
Wichita Falls, Texas 22
Charlottesville, Va. 21
La Crosse, Wis. 21