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Restaurant Industry Trends |
Tuesday December 2nd, 2008 |
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Chain Restaurant Industry Pay Trends - By David Mansbach |
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This article discusses executive pay trends within the chain restaurant industry. |
Recently, HVS completed its annual study of industry pay trends within the Chain Restaurant Industry, the 2005 Chain Restaurant Corporate Annual Report(C). Listed below is a selection of our findings that I believe chain restaurant executives will find of interest1.
Nationwide Base Salaries and Average Bonuses
The national results confirm that compensation in the restaurant industry continues to be connected to the hierarchy of a traditional organizational chart with the Chief Executive Officer and Chief Operating Officer/President making the most.
Base Salary and Average Bonus Results by System Sales
In most cases, as a company's system sales increases, executive compensation generally increases as well. For example, a Chief Executive Officer overseeing a company with revenues of $100 - $500 Million received a median base salary of $400,000 while a CEO of a company with revenues of greater than $500 Million received a median base salary of $586,573. Typically, operations positions such as Regional Director Operations, Area Manager, and Unit Managers don't follow this trend as these individuals have the same scope of responsibility no matter the size of the company. For example, an Area Director for most companies will oversee four to ten units.
Nationwide Long-Term Incentives2
Long-term incentives continue to be a critical component of compensation for executives within the chain restaurant industry. While "best practice" companies continue to offer competitive long-term incentive packages there has been a shift in how executives are rewarded at public restaurant companies; as the SEC now requires that stock options be expensed at the date of grant companies are shifting away from this type of reward and providing Restricted Stock Awards instead.
I hope you find this information helpful as it is critical when designing an effective compensation program to attract and retain the best and the brightest for your organization.
To learn more about the 2005 Chain Restaurant Corporate Annual Report(C) please click on this link .
1 Data from the 2005 Chain Restaurant Corporate Annual Report has been obtained through written survey as well as public documentation. One hundred and seven companies are included in the report representing all industry segments
2 Long- Term Incentives = Value of Restricted Stock Awards + Stock Options (Value of stock options calculated using Black-Scholes Valuation Model). Seventy-six of the one hundred seven companies included in the survey are publicly traded.
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