Industry Salary Survey – What Impacts Restaurant Salaries?
September 2008
By Christy Simo
It’s no secret that the current economic state is having an impact on the restaurant industry, from food prices and employee retention to gas prices and salary growth.
Despite the recent economic downturn, however, the restaurant industry continues to grow. According to the National Restaurant Association, the restaurant industry is one of the nation’s largest private-sector employers. Restaurants employ 12.8 million people today and are expected to add 2 million new jobs between 2007 and 2017.
In Georgia alone, there are 15,235 eating and drinking places, accounting for $13.4 billion in sales as of 2006. In 2007, an estimated 382,500 people were employed by the restaurant and food service industry in Georgia. That number is expected to grow to 460,400 by 2017, equaling 77,900 total new jobs added in the next decade – 9.2% of total employment in Georgia.
As the number of employees grows, how will pay rates and salaries change for those in the restaurant industry?
A GLANCE ACROSS THE NATION
Nationwide, average salaries in major cities tend to be higher, with executive chefs in Los Angeles, San Francisco and New York City averaging the highest pay – just over $110,000, according to information provided by Star Chefs (www.starchefs.com).
Line cooks tend to be paid higher in an upscale casual setting, which may be influenced by the fact that fine dining line cooks typically work in kitchens with more staff. On average nationwide, executive chefs tend to be paid more in a country club or hotel setting, followed by fine dining and upscale casual restaurants. And although the gender gap is closing, women still tend to be paid slightly less on average than their male counterparts across the country.
Overall, the number of positions for chefs and head cooks is expected to rise by 16.4% between 2008 and 2018, according to the National Restaurant Association. For those entering the restaurant world from hospitality or culinary school, it takes many years to reach the salary level of a high-paying chef. Chefs have approximately 15 to 20 years of experience, while executive pastry chefs have 17 years. Those executive chefs with six-figure salaries? They had to pay their dues to get to where they are today.
ECONOMIC IMPACT IN GEORGIA
According to Outside the Lines, Inc., there has been an average of 4% increase in pay across entry, average and maximum salary ranges since last year in the state of Georgia. The firm anticipates restaurant salaries to neither increase nor decrease in the near future, but rather plateau or rise at the rate of inflation. “Restaurant businesses are going to have to be more cost conscious than ever before when it comes to fixed costs like employee salaries and compensation,” says Michelle Keane of Outside the Lines.
Many economic factors affecting the general public are considerably impacting the restaurant industry. The cost of running a restaurant continues to rise, in part because of production, food costs, shipping and transportation costs. “Gas prices are having a significant impact for employees that have to commute to work. Shipping is also more expensive, so purveyors are charging more for deliveries, not to mention the fact that grain and produce cost more due to lower-quality harvests and increased energy expenses,” Keane says.
Debby Cannon, Director of Georgia State University’s Hospitality Program, surmises that gas prices are affecting not only salary growth, but also rising food prices. “The typical restaurateur is dealing with the escalating prices related to gas prices,” she says. “On the purveyor side, they’re getting surcharges added on to their deliveries, particularly special deliveries.”
“Salaries are a fixed cost, so when you bring in a lot of people on a salary, that’s something you’re locked into,” Cannon notes, “whereas there’s a lot more variability and flexibility with the hourly employees.”
The economic conditions could lead some restaurant owners to hire more hourly employees and reduce the number of salaried positions until the economy improves. “The variable labor cost versus fixed labor cost is a delicate balance for a lot of hospitality operations across the board, and certainly with restaurants,” Cannon says. “A lot depends on business volume, of course, because the downside with the hourly positions is that they can go into overtime if they’re working more than 40 hours.”
Rising health care costs are another factor affecting salaries in the restaurant industry. According to the National Restaurant Association, 75% of restaurant operators said their annual health insurance costs have increased over the past two years, with a median increase of 14% per year. 
Wages, salaries and benefits are considered the biggest expense for many restaurant operators, accounting for about one-third of every dollar in sales, and increasing health care costs could put a pinch on salary increases in the future.
Although the number of employees in the restaurant industry is expected to rise over the next decade, a tightening labor market means a shallower labor pool for restaurants. Still, the restaurant industry continues to grow. The number of people entering the restaurant workforce in relation to restaurant sales, however, is decreasing.
Many restaurant owners and managers are getting creative with how they compensate and retain their employees. Some are putting bonus programs into place that offer gas coupons, carpool rewards systems and provision of transportation to help entice and retain employees. And as gas prices continue to go up, more and more people are choosing to work closer to home, if at all possible, to reduce the commute time.
“Employees are already giving considerable weight to location when considering their next opportunity,” says Keane, who notes that many people are having difficulty juggling the cost of living with the salaries being offered. “With an already tight labor pool, employers may very well have to become more creative in their efforts to attract and retain employees.”
Industry Salary Survey – How Does Your Salary Rank?
