Your restaurant general manager is the leader that holds your restaurant together. What are they worth to your restaurant? Don’t worry, we cover all that and more in this post!
If anything goes wrong, they are there to put out the fire (sometimes literally). Any happy restaurant customer wants to thank the chef, but any unhappy customer always wants to “speak to the manager”.
They step in during rush hours and help strategize for better restaurant margins during the afternoon hours. I could belabor this point, but you get it, the restaurant manager is an integral part of your restaurant business.
You finally found this person that fits perfectly as your general manager. They are the perfect fit for your hospitality organization, you don’t want to lose him or her. Most importantly you want to reward them, keep them happy because they keep your restaurant operation moving forward.
One of the many ways to retain great management talent is with the right salary. This “right salary” can be very tricky, to figure out, as there is not a simple formula to use. You have read about Taco Bell testing “$100,000” salaries for managers, while many elite restaurants pay elite graduates below “$50,000” salaries – both are technically “right salaries.”
This read will help you understand what are the possible factors that went behind determining the $100k vs $50k “right salary”. And of course, help you determine what you should be paying your restaurant general manager(s).
We will discuss the following:
- Why can’t I just look at my competitors or glassdoor/linkedin and copy their restaurant salary number?
- What are the main factors you should consider to determine the restaurant general managers salary?
- What multiple sources of information say about the industry averages.
Table of Contents
Do Not Just Look at the Industry Average
Your restaurant, even though in the same space and concept as another, could be financially structured differently. Meaning, it has different gross sales, margins, and net income.
Looking only at what your friend in the restaurant business down the street is paying is not the smartest choice for establishing market-rate salaries. Nor should be your first choice when coming up with a restaurant manager’s salary.
Restaurants A and restaurant B both sell tex-mex tacos. Like every other tex-mex restaurant, their menus are very similar. They are both located in comparable areas (close to a university, crowded with college-going guac-loving students looking for affordable lunch menus). Surprisingly, restaurant A has a very different financial situation than restaurant B.
Restaurant A has all back of house staff on a lower hourly rate versus the higher hourly rate for staff at restaurant B, restaurant A has a very different supply chain and higher inventory pars than that of restaurant B, rents are also differently structured for both the restaurant (fixed lease versus fixed plus a percentage of sales). As a result, restaurant A and restaurant B’s financial performance could not look more different. If restaurant A pays the general manager the same as restaurant B, it would mean that the owner underpaid or overpaid.
This could result in either losing the general manager or even worse, losing money.
Looking at just one other restaurant is obviously not a strong approach, so looking at an average of 10 could be more powerful and perhaps the right solution? No. Most reports will just give you the industry average, they will not consider things like location (think New York vs Nashville) or type of operations (quick-service restaurant versus full service).
Additionally, they often overlook items like the size of staff or scope of the establishment, remember one full-service restaurant is very different from another. More importantly, the role of the general manager could look very different based on these factors I just highlighted.
Looking at those averages could be a good tool to benchmark, to see if you are really far-off from the industry average, but determining the right salary just from the industry average can again put you in the overpaying or underpaying situation.
Factors You Should Consider to Reach the “Right Salary”
Role of the General Manager at Your Restaurant
When you look at a one-off quick-service concept, the role of a general manager is a major role.
This manager is the management team, no director of HR, accounting manager, or purchasing manager, they are responsible for an array of things. Team morale, customer experience, marketing, inventory, recruitment, and retention (high turnover is a usual scenario for fast-food chains and costs big bucks) to name just a few.
A general manager at a larger growing chain or multi-unit operator has much more management support, so needs to be less of a jack of all trades. For example, hiring can be outsourced to a hiring manager, versus handled all by the restaurant manager.
Before you even hire your general manager, you usually have a list of things you want him or her to do. Ideally, you have an understanding of what the role will perform and accomplish. It is really the complexity or the simplicity of it needs to be accounted for in the salary structuring.
Sometimes, you hire the general manager for a certain set of predetermined tasks, but also could use the help in other one-off projects. Great managers find untapped projects that drive the business forward.
For instance, you know you have higher staff turnover (need a strong manager), or have restructuring plans in the near future, or wish to implement a new marketing strategy. Maybe even need his or her help with launching a catering business or participating in a food expo – these additional factors are also valuable and should be accounted for in the salary.
Qualifications and Experience of Your General Manager
This should be the same, irrespective of the business you are in. Though it is even more important when we are talking about restaurant experience, due to the inherent challenging aspects of the hospitality industry.
More qualifications and experience come with the expectation of a higher salary, just make sure you find the right mix for your restaurant management team.
For your general manager, you could look at this from three aspects. Firstly, the length of his/her experience. More experienced managers would expect higher pay and rightly so, they have the ability to deal with varied situations, and with some past restaurant lessons tend to make better decisions. Secondly, not just the length, but the exact industry experience.
Repeatedly, we have learned the multiple ways the restaurant business differs from other businesses. For instance, it is one of the few businesses where production, delivery, operations all occur under one roof. This setup comes with its own set of complexities, and a manager with experience in this setting is more suited to your business.
In this, you can dive further, and see if the manager comes with the background of the same line of the restaurant business (chains, high-end, quick service, and so on). The niche expertise might or might not come with higher price expectations. It is usually combined with the first aspect (length of experience), and the last, i.e. the qualification of the general manager. Qualifications of the general manager would include their degrees, training if they have experience in just some departments like operations or finance, or rather have well-rounded knowledge from higher or C-level positions held in the past.
Needless to say, but more qualifications usually tend to mean higher pay. For your one unit restaurant, you likely do not need an ex C-suite, though you do need someone with a year or two of similar management experience.
The right salary is usually determined to keep in mind the combination of all three aspects discussed here and ensuring that you do not overshoot your mark, looking for the right mix of those three traits for your establishment.
Affordability for Your Restaurant
Of course, it would be nice to have a highly qualified general manager with an impeccable track record. Though, I recommend you do not get carried away with the list of skills on the job posting. You need to be able to afford the manager that you are searching for.
It is a common practice in the industry, that the manager’s salary does not exceed 10% of your sales.
I find this to be a bit on the high end, as if you also draw a salary and are an active owner, the manager role should be somewhere akin to 5% to 8% of sales.
While this is just a common practice, do not use this figure blindly (we discussed previously to not fall into the industry average trap).
Also, there are creative ways to form the salary package if your restaurant is not able to afford the right general manager. Operating under the assumption that this manager will add value, we can delay cash payments into the future, using profit sharing or cash bonuses as future incentives.
Remember a dollar today is always worth more than a dollar in the future, so include him or her in profit-sharing, cash bonus based on certain goals (sales, food percentage, labor percentage, and more).
The “Should-Not-Lose-The-Manager” Benchmark
Finding that perfect match between the general manager and your restaurant does not come easily. When you do find the right fit, you want to make sure you do not lose him or her.
This is when comparing to other restaurants could be very valuable. When our restaurant, restaurant A figures out what restaurant B is paying its manager, restaurant A knows that they must match the pay of restaurant B to ensure that their manager is not poached. Remember, it is not just restaurant B that we need to be worried about but also other hospitality businesses in our space with different cuisines, hotels, or even casinos for that matter.
This is when you can use the industry average to benchmark and ensure you are not too far from the figure. You basically want to know the minimum threshold you definitely need to pay in order to reduce manager turnover (Why you ask? Turnover costs you money!).
Restaurant Manager and General Manager Salary Averages
As much as I shy away from utilizing the salary information available online, I do think it offers itself as a valuable guide. It should help you understand the range of what salaries should be offered, allowing you to adjust to your specific restaurant, organization, or role.
The base salary range of a Restaurant General Manager in the New York City area is between $55,000 and $160,000 with a weighted average of $73,360. This weighted average is nearly 40% higher than the national average of $52,815.
Within New York City, several factors contribute to the wide salary range including; price point, size of the restaurant chain, and restaurant category. Here is the breakdown of Restaurant General Manager salaries within the New York City area:
- Fast Food, Small Chain, or Low Price-Point Restaurant examples include: McDonald’s, Burger King, small independently-owned diners, deli’s and sandwich shops
- Mid-Level Restaurant examples include: Casual dining restaurants such as Applebee’s, TGI Fridays, Chili’s, etc.
- Fine Dining examples include: Maggiano’s, Ruth’s Chris, and Capital Grille
- High-End Boutique restaurants examples include: Specialty diet and restaurants that cater to niche clientele
The key takeaway here is that major foodie metropolitan restaurants carry a large premium compared to their B or C class cities counterparts.
As you think about your area, demand for similar management labor, and competition for talent, that should help craft a competitive restaurant manager salary range as well.
Achieving the “Right Salary”
All these factors from above come together to make a good framework for you to find the right general manager/ manager salary for your restaurant. The industry averages we have provided also should help you with benchmarking, as we have geared examples for multiple major and non-major cities.
At the end of the day, we recommend not only taking into account the industry averages but combine that with the logic and reasoning we have explained throughout this post. The most important goal here is to not only attract but also retain one of the most important restaurant staff members.
Still not sure what to pay? Simply shoot me an email and I would be glad to help.