Average Salary For Restaurant Managers
QUESTION FROM: Ellen in TX
"I’ve got a couple of BBQ restaurants and a general manager at one store who has really turned the restaurant around. We had three record years in a row. She mentioned a few times that she would appreciate a bump up in pay but I’m already paying her $48,000.
I really can’t afford more. Has the going rate for a GM in TX gone up? Think I’m paying a fair wage."
Ellen
HH ANSWER:
Depending upon your location, concept, sales and number of locations being managed– a restaurant manager can make anywhere from $43k - $125k in most markets... but often times the level of discontent felt by a general manager or executive chef is less with where they fall in the averages and more with where they fall in terms of hours working and opportunity being offered (provided, of course, your getting the culture right).
When new restaurant managers reach out and ask for help with “coming up with a number / salary to request”, I usually respond by telling them that:
Ask “what is the salary is being offered?” and then ask if you can have a day or two to think about it and get back to them.
It never makes sense to negotiate against yourself by coming up with a number first.
#1. You don’t want to ask for too little
#2. You don’t want to price yourself out of their reach
#3. You don’t want them to have to stretch to reach you and then resent you for it later.
#4. Your wants may be irrelevant to their budget - see what it pays, ask who will be developing you / mentoring you, ask what sort of additional training manuals / reviews you can expect (as a new manager, nothing is more valuable to your career / marketability and their business) ensure the bonus is based on Gross Sales and things you can actually control, negotiate perks like: vaca time, insurance, dining allowance or retail discounts at other outlets and free parking.
Many FOH & BOH managers fall victim to the belief that if they build sales revenue and increase profits over PY by meeting (or beating) budget, their salary and/or bonus will increase by an equal proportion...but it’s not always that simple.
The reason this represents faulty logic and a recipe for “entitlement” is because most managers fail to see their restaurant from your perspective and what I mean by that is from a “global perspective” that includes: other management costs, capital expenditures, hidden occupancy costs, the price of commodity futures, debt service and/or the financial performance of additional outlets when applicable.
A GM with 20years experience in North Carolina recently submitted this question:
“Just out of curiosity... what do you feel is a fair annual salary for a general manager with 20 years experience in the concept? Restaurant volume is roughly 1.2 million annually and food and labor numbers are under control and within budget. Customer reviews are very high and staff retention is good too.
I’ll even admit, I’m that GM and I feel I’m grossly underpaid. I will also admit I’m a human being and certainly have areas I could improve. I’m not trying to blow my own horn here.
I will not disclose my estimated annual salary. I but I want to know what the “going rate” is these days.”
My response was this:
“Going rates” are relevant when it comes to whether or not your owners are under-paying you.
What is much more relevant is what ownership can afford...which requires much more info - that being said, a ballpark or good rough guess could be made by knowing the following:
1. Total Sales ($1.2MM)
2. Occupancy Cost/Rent/Mortgage (?)
3. Food & Bev Cost (?)
4. Total Hrly Labor Cost (?)
5. Total Mgmnt Cost (?)
7. Controllables (?)
8. Amount of turnover / # of staff developed
As a general rule of thumb (and with all costs being in-line with industry averages) I’d say 2.5% - 3% of gross sales if there’s a mgmnt team of 1-3 in FOH and 1-3 in BOH but if main determiners of profit aren’t being managed or are simply not in line due to other factors - then that salary may not be justified...or a higher salary could be justified - so a 9th big factor would be: # of other units and their profitability (#s 1-7).
Other factors that impact the budget for GM salary would be things like: benefits, incentives, amenities, discounts, capital requirements, investor positions, etc...
But that all just explains a fiscally responsible payroll - it doesn’t mean you can’t command more than $30-36k +bonus elsewhere, it just means you might want to rethink any assumptions that your owner(s) should be paying you more.
Going rates for a GM can often range from $43k-$125k depending upon concept, sales, location and how many others mgrs you have.
Some GMs are paid hourly wages...and I like that idea especially as far as DOL & liability is concerned but have no first hand with that model.This can be cured, in part, by exposing more experienced members of the management team to the direct and indirect finances associated with the establishment via invitation to P&L review meetings.
Offering your managers a more global perspective may yield a greater understanding - especially in the event of multiple outlets or concepts (e.g.,if that their one singular unit is hypothetically grossing $4MM/yr in sales as a stand-alone outlet, that may warrant a particular salary increase based on labor $/%... but if it’s one out of say 6 outlets generating $48MM in gross sales - an owner may be able to justify a large increase in salary - especially if they are first committed to paying all GMs and ECs a competitive salary commensurate with their experience.)
Some new DOL guidelines and recent class action lawsuits (initiated by salaried managers) have driven some operators to adopt an hourly rate formula for GM's and managers. The easiest way of doing this is to budget a GM's annual salary (e.g., approx 4-5% of gross sales) then divide that number by fifty 50-60hour weeks and pay it weekly with 10-20 hours at time and a half (per legal requirement.
That being said, every owner holds a unique opportunity to incentivize and compensate their most valuable GMs and/or Chefs beyond the pay with which they might be growing restless or a quarterly bonus of $5k-$10k by either
A.) improving the culture
(See this article on culture: https://www.hospitalityhelpline.com/labor/2019/1/12/strong-culture-amp-good-quality-of-life)
B.) giving them more support (assistant managers or hourly "hammers" …especially as gross sales rise and/or
C.) making them a partner....and not just in title only with “profit sharing” - but a real bona-fide equity holding partner (over time) that begins with a deep dive into financials and ends with a transfer of majority interest. (see related hospitalityhelpline article: “Bonus Round”)
I’ve seen mentorship and benevolence like that (where an experienced owner gradually passes the baton to young, talented and hungry employees or offers to open an entirely different concept with them) and it almost always results in a manager with an unparalleled abundance of pride, dedication, gratitude and willingness to pay it forward by further developing their own teams.
I’m not trying to play out an exit strategy for you or anyone else who is not looking for one but… if all of the other pieces are there - opportunity like that may just be the one missing piece.
It’s not a bad idea for the right operator so I’m just throwing it out there.
After all...you have one party realizing their greatest dream - and another freeing themselves up for other things while earning a small % or fixed fee every month.