It’s no secret that the cost of restaurant labor is going up — in 2019 alone, 11 states saw increases to their minimum wage, and we’re in one of the stiffest labor markets in recent history, with unemployment down to 3.5%. The competition for talented workers is fierce. In restaurants, where staff are the face of the business and interact with diners daily, many business owners are increasing compensation to attract and retain employees.
According to Square Payroll data, in 2019 the per-employee pay at restaurants grew by 7%, compared to the Bureau of Labor Statistics reporting a 3.2% increase across the entire American labor pool.
We’re thrilled to recognize some of the Square businesses that gave their team members the biggest pay boosts this year. These nine U.S. restaurants gave their employees raises ranging from 27% to 96%, nearly doubling workers’ pay in some cases.
||Fairweather Cider Co.
||Tres Leches Cafe
||Elements Eatery & Mixology
||Lexington Park, MD
||Woodland Hills, CA
||Mariposa Mezcal Bar
||Mac Daddy’s Gourmet Grub
||Lord Windsor Coffee
||Long Beach, CA
“Due to sales doubling from last year, we determined it was important to not only invest in the business but in our employees as well,” said Magaly Saenz, human resources admin at Tres Leches Cafe in Phoenix, Ariz., the #4 most generous restaurant. Her team was happy to begin offering health benefits as well as merit raises based on performance, including attendance and teamwork.
“Tres Leches is known for excellent five-star customer service and consistency. The expectations for our employees are high, and we wanted their compensation to be reflective of that as well. We love our staff and wish to help them meet not only their financial goals but personal goals as well by offering a leadership ladder — a path to grow with the cafe.”
Have you given your employees a big raise this year? Let us know in the Square Seller Community. We’d love to hear your story and consider your business for inclusion on a future list.
Here are some other key trends in restaurant pay:
At a macro level, three states outpaced the Square Payroll average restaurant wage increase.
- Michigan was the state with the highest average employee raise year over year, clocking in at 9.9%.
- Colorado restaurant workers saw a raise of 8.4%, commensurate with a 2019 increase in minimum wage to $11.10.
- Arizona and New Jersey tied for third place, with 8% pay increases for restaurant workers.
Tipping is still one of the most important earning mechanisms for restaurant workers.
- So far in 2019, 14% of employee earnings came from tips, up 27% from 2018 (11%).
- States where tips make up the greatest share of workers’ pay:
- Washington: 22.43%
- Missouri: 21.19%
- New Jersey and North Carolina: 19.5%
- About two-thirds of restaurants pool and split tips, while one-third directly pays tips to the workers who earned them.
Cash flow is a concern for employees around the country, in every industry. Interestingly, 38% of restaurant workers request a physical check (instead of direct deposit) to receive their pay. Regardless of the mechanism, here’s how often restaurant workers get paid:
- 60% are paid every two weeks
- 38% are paid every week
- 2% are paid once per month