Cost-Effective Employee Benefits for Bar Owners: Boost Morale & Retain Talent

I'm sure we have some folks listening that have multiple units , but most of you , I'm assuming , have one unit . We're looking to get into the business and looking to start a bar . When we talk about employee benefits , that can be something that is very foreboding . It can be a hard thing to deal with . Part of the reason is that employee benefits cost money .

Obviously , for many bars , many restaurants out there , there isn't much money to go around . Those employee benefits are directly taken out from your cash . There is another side to that argument , and one that I think holds a lot of weight , which is when you attract and retain the best talent , you have a better cost structure period .

Sometimes it does cost some money to attract and retain the best talent . Benefits are one great way to have a culture that's really going to support having the best people in your area working for you . That's really what any conversation about employee benefits comes down to .

It comes down to your company's culture , something that we've talked about before and we'll talk about plenty of times in the future . Culture is one of the three pillars in my mind of what it takes to run a successful bar . Those pillars are mindset , concept and culture .

Mindset being the mindset of the ownership and management to get things right and to actually move the bar in the correct direction . Concept being your menu , your decor , your physical concept , all of those things .

Culture relating to your employees how they feel , how your guests feel when they come in and how your employees are taking care of while they work for you . So culture is a key pillar to having any good bar and employee benefits . Some do cost money .

Some things we're going to talk about today don't cost that much money and the thing is that when you provide different experiences , when you provide different benefits for your employees , when you stand out as an option where you're doing things that other employers in the area are not , you set yourself up to attract and retain the best talent period .

And that's important , because we all know how much turnover there is in the bar business .

We all know how hard it can be to find the right employee , and we all know how hard it can be to keep those employees once you have them , because unfortunately there's always the concept that the grass is always greener on the other side , that they're going to go to a different bar and they're going to make more , or something about that other bar is going

to be better than their situation working for you . So to combat that , you need to make sure they have benefits and it's very obvious to them . The grass is probably not greener .

For the purposes of this conversation on benefits , we're going to break it down into three categories Stuff everyone can do things that cost a bit more money but give you a little bit better return .

And then what I'm going to call , in a perfect world , items and we're actually going to do this a little bit backwards because I think the in a perfect world the items that cost the big money we can cover those first and then we can work backwards through things you can do that cost a little bit less money , and then we'll end on free things .

You can do things that cost you very little but can really help your employee experience , your employee culture and help you attract and retain that top talent .

So our first category is what I like to call in a perfect world benefits , and those are pretty simple health insurance , 401k , life insurance , some sort of education or tuition reimbursement , and I know most independent bars , especially in the US , where you know , I know for our listeners outside of the US , health insurance is something that's in your taxes .

It's not something you think about in the US , it's definitely something we think about and it is fricking expensive . So that's why health insurance is there . Obviously , if we can provide health insurance for our team , great .

If there's a bar , especially a small bar , providing health insurance , you are going to be one of 1000 , probably around you that has that benefit .

So health insurance is definitely a reach goal , but it's something that , if you can afford it , if you can figure out a way to make it work with some sort of group plan and talk to different insurance companies and make that happen , that is phenomenal .

Now , coming up a little bit , we will talk about some other health related benefits you can give that are not near the same cost as health insurance . We look at a 401k or retirement account . Those are a little bit cheaper to do and , frankly , a 401k or retirement account is not outside of the bounds of what a bar can offer .

It is going to cost some money , depending on which company you use , how it's administered all of that . But if you go online and you look , there are companies that will administer these and your cost for 20 employees will be , you know , under a couple grand a month . So it is something that's possible .

At the same time , then you have to think about 401k matching . You know your employer match to the employee contributions . If you're going to do those , what that looks like in that related expense . Life insurance is something that is , honestly , a little cheaper than most people realize .

So you can , generally for businesses , get a life and AD&D , accidental death and dismemberment policy for your employees without it costing too much . Now , obviously , you need an insurance agent . You need to look at all your options based upon what state you're in , what area you're in .

Your options will be different , but that is something that you can do and it's not normally too much of a reach , but it has to make sense within your books . We're obviously all here to make money . Yes , we want to give our employees the best benefits possible .

Yes , we want to take care of them as much as possible , but you can't break the bank to provide employee benefits . And then our fourth and final in a perfect world benefit would be tuition reimbursement . And when I say tuition reimbursement , you don't have to think about paying for somebody's whole college bill .

As a matter of fact , if you had a bar in a college town , this is something that you could offer . Obviously , you'd have to have qualifications to receive this benefit , so you have to work X number of hours per week , you have to have been established here X amount of time , et cetera , et cetera .

But you really can work a situation where maybe you're reimbursing 300 bucks a semester for the folks that are in school , so you're not paying for their college , it's not really reimbursing the tuition , but you're helping cover their books .

There are things you can do to give people that added benefit , and especially in a place like a college town , that's gonna go a long way because most of the folks who are gonna be employed are related to the college . Go to the college . Maybe they dropped out and they wanna go back , and this is gonna help them do that .

So that's a wonderful little benefit you can provide . And again , the nice thing about a tuition reimbursement type program is you can right size it to fit your establishment . Obviously , it doesn't make sense for everyone to offer this , but if you're in a college town , it's something I would consider and it's something that you can control the spend on .

So then that takes us to our things that cost a bit more money but give you good results . So these are mostly health related programs and there are things that you can actually afford that provide benefits far above and beyond what most bars and restaurants are doing , but at the same time , like I said , you can afford them .

It's not gonna break the bank , it's a huge benefit . These are kind of the perfect win type scenarios . Now again , for some of our listeners from outside the United States , some of these probably won't make sense because we have healthcare that works way differently than anywhere else in the world .

But for those of you in the United States , let's walk through these real quick . So the first thing that I think that is easy to do and is a benefit that sets you apart . Yes , it's gonna cost you some money , but give people sick time and there are some states in the US that absolutely require sick time , but most of states don't .

So if you give people even 10 days of sick time , seven days of sick time , even a little bit of time like that every year , it gives them the opportunity to be sick , not worry about coming to work , and it helps you because it's protecting the sanitation and the health of your establishment , your other employees , it's protecting your guests .

At the same time , it's allowing that person not to feel like they can't make their rent payment because they were sick and decided not to come into work . So I think sick time is absolutely a good thing to do .

And when it comes to sick time , one thing that you can do when you set it up is you can say that sick time accrues at a certain rate per hour work . So rather than give all your employees say , hey , everybody gets 10 days a year , you say okay , for every 40 hours you work , you accrue one hour of sick time , or whatever that math is .

Obviously you guys can calculate that out . That way they accrue sick time as they go along and if they get sick they have the ability to take that off .

And again , it's a huge benefit most people don't do and it really helps protect not only your employees in giving them a better environment , but it protects your other employees from getting sick and your customers from getting sick .

So there's a lot of benefit there for , yes , cost , but what's relatively a small cost in comparison to the benefit that you're reaping from it . After sick time , when we're talking about things that help make people healthier , look at doing a wellness program , and when I say a wellness program , essentially a reimbursement program .

So say that you want to have a budget of $600 per employee per year for your wellness program , so everyone every month can submit bills for reimbursement up to $50 . And that can be however you design the program . Personally , I would design it in a way that says , okay , anything you're doing towards your health can count .

So if you see chiropractor or an extra punctureist or anything like that , okay , cool , submit the bill , we'll write a check . Prep to $50 . If you have prescription , sure , you can reimburse them for that .

There are some rules and regulations that you need to check and there are some state by state differences as well , but you have a lot of free reign when it comes to a wellness program that's reimbursing . For instance , you could reimburse everyone's gym membership . So you get $50 .

A lot of folks that work in the restaurant bar industry have gym membership , so that's gonna cover their gym membership every month . Again , it's an additional benefit and by helping your folks participate in more wellness activities , in theory they will be healthier .

And the final thing that's around health that we're gonna talk about in this category is telehealth , and telehealth gives some really unique opportunities to provide benefits that were not really benefits that anyone talked about even four or five years ago .

This is kind of a post-COVID phenomenon and with telehealth , what you have the opportunity to do and there are different insurers that have different programs . If you look at the National Restaurant Association , they have a number of people that they work with that offer specific programs . A lot of these are under $10 a month per employee . So think about that .

For , let's say , $10 a month per employee , you get this telehealth package and that gives them unlimited telehealth visits and unlimited telehealth psychological visits . And the psych visits are really really important . Yes , normal health is important . Being able to say , hey , do I have a cold ? What's going on here ? Talk to a doctor , that's great .

But we have a serious mental health issue in the hospitality industry and you can see that in increased suicide rates , you can see that in depression rates . You can see that in substance abuse rates and especially in the bar business . We all know a lot of our bartenders are going through things . A lot of people are not having an easy go at it .

So if you can spend $10 a month and your employees can get the mental health services they need to make themselves better , to develop themselves , to be better people , and in turn they'll be better employees , they'll be more grounded , you're just winning . That's cheap at $10 a month , but alone the fact that they can then get other telehealth services .

So , seriously , that is a simple , easy , really not expensive benefit . When you think about it , that can provide huge value to your employees and it's something that not most bars do , because most bars don't do it . It's a huge differentiating factor .

It makes you a better employer and , trust me , people will stick with you , people will want to work with you just for that benefit alone . Now , other benefits that we can give folks that fit in this cost a little bit more money but have a big benefit , benefits that have a benefit , benefits that have a big impact , we should say .

The next one I have is profit sharing . So when you think about bonusing people , you can bonus in a number of different ways and I really suggest everyone has a bonus program . I firmly believe that you're better off paying for performance than just paying a higher flat rate .

I always like to give everyone that works for me the opportunity to get a bonus , because it helps motivate them and helps us all be on the same page and it really helps encourage a company culture of camaraderie , collaboration , and that we're all in this together in order to all make more money together .

And when I say profit share , a lot of you are probably saying well , why would I ever want to do that ? It doesn't have to be a big amount . I'm not saying take half your profits and give it to your employees . Maybe it's 10% . One thing I always did was I always bonus to my managers based off P&Ls .

You can bonus your front and back of house off KPIs . You could bonus them off of , you know , for the ticket times for your bartenders or your kitchen , your front of house , your servers , your bar . You could bonus them off of sales per customer , so what their average ring is .

Now you may have to do some adjustments to kind of even it out between those people that work the day shift , those people that work the evening shift right . Obviously there are some differences , but you can figure out a way to balance that all out and you can come up with a pool again , say , 10% of your bottom line .

So we're not giving away all our profits , we're not giving away most of our profits , we're giving away a sliver of our profits , and then figure out a way to divide that among your team and not necessarily everyone on the team , but everyone on the team that qualifies .

And again , the whole purpose here is to align everyone's goals together and then to give your employees a chance to do a really good job and make more money . It works and it's something that most people don't do , and you can do bonuses on an annual basis .

You can do a Christmas gift money , which I always did , but I would consider doing bonuses on a quarterly basis so that they're hitting more frequently , and that way your staff is constantly rewarded for what they are doing .

Now the final thing that we're going to discuss in this section is pay time offer vacation , and I know that for a lot of bar owners , vacation is just not something that's in the budget to offer , especially when we've talked about doing some sick time and some telehealth , having a wellness program doing a lot of profit .

Share vacation time isn't really in the cards , but just like sick time , vacation time can be accrued . You can come up with a formula where you can earn up to 40 hours a year or something and every hour you work equals x number of hours of vacation time . Maybe one hour worked is.02 hours of vacation or something .

But you can develop a mathematical system that works in that way and if you have the money , if you have the ability to get folks vacation time , they will love it . And with vacation time , something that's important to remember is you don't have to have everyone qualify right away .

You can have a rule that you don't start accruing vacation time until you've worked there two years , so you make people actually stick around and actually have some longevity before you give them this benefit . And again , I know it's something that not most bars are going to be able to afford .

But if you can afford it , if you're lucky enough to have an establishment that's running on all cylinders , that's pumping out money , where all your standards are being followed and everything's great , it is something to add that will really , really differentiate you from the pack .

But I want to go back real quick and just highlight within this section of all the benefits , potentially that we've talked about Sick Time , a wellness program and a telehealth program are going to give you a lot of bang for the buck . The telehealth is probably going to give you the most bang for the buck .

But combine that with a sick time program and a wellness program . You are looking at employee benefits that almost no one in the industry has . That'll probably altogether cost you less than $100 per employee per month . So yeah , if you have 20 employees , that's $2,000 . Okay , that's a chunk of change .

It's definitely a chunk of change , but it shouldn't be too much and you should be able to work that into your projections and your labor and still maintain a 55% prime cost , because incrementally you're not adding that much cost and you're giving your employees a heck of a lot of benefit and you're differentiating yourself from everyone else by a whole lot .

It's really good benefit for your money . Now let's move on here to the last set of things we're going to talk about for employee benefits , and these are not quite as money driven . These actually are not money driven at all . This is a section I call Stuff . Everyone Can Do the reason I call it that is because these don't really require any budget .

These are things that you can just do . They're easy , they're going to help your employees , they're great ways to build some loyalty and to give your employees a little bit of a better experience than anyone else in town is offering .

So the first thing I have on this list and this is really not a benefit , but it is really important for your employees to be aware of this and to maintain a really good culture for your employees and that's flexibility

. Now , flexibility isn't a benefit because it's just not being an asshole about when people work and obviously there are business considerations . When you have people switch shifts , you need someone that's just as strong as the person replacing someone , or stronger . You have certain employee needs .

On Saturday night , you need X number of people working and if everyone wants to take that night off , obviously that's not going to work .

But what you can do is try to be as flexible as possible to give people as many options as possible to allow your employees to switch shifts or take off a night when it makes sense within the business , but also pretty much whenever they want , if you can do it .

So it's a little bit of being willing to bend over backwards for your employees , to help them with their life outside of work and getting things scheduled . Yes , it's going to make your life harder , but it costs you nothing , absolutely nothing , to allow people a little bit more flexibility than most bars allow , and the benefits from it can be great .

Absolutely wonderful benefits can come from that because your employees will feel like you care more . It's really building that culture of trust and respect with your employees and it's one of the easiest ways to do it . And it's true .

The second thing that I have in our kind of stuff everyone can do really cheap benefits but that make an impact section is family meals and employee discounts . So I think that every bar is assuming you have a kitchen right . There are some bars out there that don't have kitchens and this doesn't apply to you .

But if you have a kitchen , especially if you're doing lunch shift and a dinner shift , you should have a family meal for your employees and it should be right around the shift change time , so five o'clock .

If you're just open in the evening , maybe you open at five , so you do a family meal at 4.30 , but you should give everybody a meal when they come into work . And when I say family meal , that does not necessarily have to be something off the menu . That does not mean they get to order whatever they want .

When I say family meal , what I mean is one meal made family style that everyone in the restaurant that's working gets to eat . So it can be something simple . It can be chicken fingers and fries , it can be , you know , salads , it can be meat , it can be whatever you want it to be , but it should be balanced right .

We don't want to give people a bunch of carbs before they start their shift . That's not going to be helpful for anybody . But go ahead and feed your folks , give them something to eat and if you work it in , it's really not much expense , it's really pretty easy to do .

I know , back when I was much younger , I worked in fine dining and I worked at a very nice steakhouse and I will tell you right now , our family meals were things like chicken fingers and fries in the salad . They were not the nice steak , it was essentially nice cafeteria food .

But even working at a restaurant where we were reselling these gorgeous , wonderful steaks and eating chicken fingers herself , it was still a benefit . It was still something that a lot of employees liked , because it takes out that issue with how am I going to have dinner tonight .

I have to go into work , I woke up late , I'm running late , I took a shower late , whatever , and now I don't have time to get food . This takes care of that . So I really do think a family meal is a great benefit and I think it's easy and doable and not too difficult for anyone to pull off and , again , it shouldn't cost you much money .

One thing that I know that a lot of bars and restaurants that have a family meal do is they look at something and go . You know , we kind of need to cook this ground beef that's going to go bad in a day or two . All right , let's make some meatloaf and serve it as a family meal .

You can take something that is on the edge of going bad and , rather than have waste , use that to feed your staff . There is some expense obviously associated with the food , but it is well worth it .

Now , along with a family meal , you should also always give your staff employee discounts and , depending on the state or country you're in , you may or may not be able to give discounts on alcohol , but you absolutely can give employee discounts on food , and when we're talking employee discounts on food , it doesn't have to be a huge amount . Right ?

Some places are going to give people 75% discounts and frankly I think that's too much . I really like 50 , especially when you're doing a family meal too , since you feed them every shift , you don't have to give people a huge food discount . But they should have a 50% discount .

If they come in with some friends and get some food , you should give them that 50% discount . Let them enjoy food that they want and give them a discount for 50% . I've always really liked because , as we've all talked about , our prime cost should be right around that 55% number if we're doing everything properly .

So at 50% you don't have quite the same labor in employee ordering food that you would in the public ordering food most of the time . So 50% you're still covered your labor in the kitchen . You've still covered your food cost . You're just cutting out kind of that profit section when you're giving the food to your employees .

Now the third benefit that I have as stuff everyone can do is trainings and tastings , and it sounds kind of odd that training would be a benefit , but what you'll find in the restaurant business and the bar business most of folks that work for us they want to learn more .

They want to know more about cocktails , they want to know more about vodka , they want to know more about booze , they want to know more about the food that they're serving . So in some ways , trainings can be a benefit . Now , obviously , if you're going to bring them all in and go over the new employee handbook , that's not a benefit at all .

But if we're talking tastings , training on product training , on types of alcohol , types of food , then we really are talking about something that is actually good information that's going to benefit

them in the long run . That's not actually at all specific to your establishment and tastings , I think , are a wonderful thing to do . I don't know how anyone is supposed to sell anything they haven't tasted . So not only should your servers and your bartenders be tasting everything the kitchen makes .

You should also be tasting all the cocktails , all the drinks that are coming out from behind the bar as well .

And if you have , say , a new liquor that pops up , maybe it's a new brand of tequila that's gotten popular or a new rum that's gotten popular A lot of times you can talk to that rep and have them come in and taste your staff on it and train your staff on it , and that can be a huge builder for your team . It brings everyone together .

Everyone gets this fun experience . Your rep gets to come in and teach your staff how to do something , which , in turn , you know . That rep comes in and pours a little bit of tequila for you guys for free , talks to you all about the distillery and how it's made and all these wonderful things . Well , now your servers have a story to sell .

Because the thing I believe more than anything else in the bar business when you can put food or drink with a story , when I can tell you not just that , hi , I have this mojito , hey , you've got to try this mojito .

It uses tequila and I , we tasted a bunch of it and he's been in and it was wonderful and this is where this tequila has grown and this is what's special about it compared to other tequilas . And then we blah , blah , blah , blah , blah .

That sells drinks , that improves the customer experience , that makes your servers , your bartenders , feel better because they can tell these stories . It helps them make money . So tastings things like that are always a great thing to do from time to time . Yes , it's training . Yes , it's probably something that you're going to make mandatory . Yes , for your employees .

They're not always going to like showing up for it , but when you can turn it into something that helps them make more money , something that helps them learn more about their products and maybe have a few drinks in the process , it actually is a benefit for them .

It's actually something that's going to make your employees better and it's going to make your employee culture so much better than a lot of establishments in your area . Now the final idea I have for you all on employee benefits is to gamify incentives based on KPIs . Now , let me break that down because we got a lot going on there .

So when we're talking KPIs key product indicators we're talking about things like sales per guest check , sales per guest right , sales per seat ticket times for your bar and your kitchen . Maybe we're talking about if you have a food runner , how much food they run right . It can be all sorts of different things depending upon who it is .

And if you want to check out any information on KPIs , if you go back , we had a fantastic episode that covered a bunch of KPIs that you should be measuring and then how to help your staff achieve those KPIs and move those forward as a second part to that episode . But go back there , listen to KPIs . Think of other KPIs .

Maybe if we had our sales rep come in and do this training about this new tequila now we're gonna have a competition to see who can sell the most of it , so we could have a gamified incentive on the basis of how much of this tequila do you sell ? Now , when I say gamified incentive , I mean points .

Create a point system and you can run point systems that are complex . You can run point systems that are simple . So , for instance , maybe a point system is how much of this tequila do you sell ? Maybe the point system is the person with the highest guest check average or sales per seat average .

You can make it any KPI you want , any indicator , any mathematical thing you can come up with . You can make it and then assign the points to it and make it a competition . A beautiful thing about gamifying something and making a competition A that speaks really well to your millennials , to your Gen Z folks .

That's the kind of thing that's gonna motivate them A lot more than some of your older folks . But the gamification with the younger generations is a way to produce good results . Now , one thing to keep in mind is you wanna make whatever game that you're creating to push forward specific numbers fair .

So , for instance , let's say you wanted to say we want the highest guest check average . So you have all your servers , whether they're working in the morning or in the evening . It's one giant competition to see who has the highest guest check average . Now , probably your server on Saturday night's gonna win , because it's just guest check out .

Now what you could do a little bit more complicated math . But it totally eliminates any issues where someone could say it was unfair . You could say instead okay , it's not the highest guest check average , it's the person that increases their average guest check average the most . So if you average 20 and you increase to 40 , that's 100% increase .

If somebody else averages 40 and increases to 45 , yes , 45 is higher than 40 , but they only increase theirs by a much , much smaller percentage than you did . So that's one way to level set everything .

But just remember , anytime you're going to have one of these kind of gamified KPI type incentive programs that you are doing in a way that is fair , that is balanced , that allows you to have some equilibrium between different shifts , different types of day , different days of the week , so that one employee isn't always the winner and other employees feel like they

don't stand a chance at winning , and the whole purpose of doing this is then to give people prizes and rewards for winning . That is the incentive for your employees to do this and to make their KPIs better . So there are some simple things that I like to use for employee incentives like this that , frankly , are generally free . The first one is free goods .

If you're in a state that allows you to receive free goods from your suppliers and allows you to give those free goods to your employees , that's a great way to do it . You get in a bottle of some obscure vodka that nobody's ever heard of , that your supplier's trying to push , and so you got it for free . Heck , have a competition .

Make that the award for winning the competition with your employees . You can also do merch , whether that's beer t-shirts , liquor t-shirts , hats , whatever that you're getting from suppliers for free , or your own merch . Now , your own merch is going to cost some money , right ? Your t-shirts , your hats . You're paying for those .

You're paying costs for them , but providing those to your employees there's never anything wrong with that . They're gonna wear them when they're working . They're gonna wear them when they're not working and so essentially , as we talked about before with March , you're paying for a walking billboard . So that is a great incentive .

But possibly my favorite incentive and this is not always something you can do , but if you have good suppliers you can schedule this out , you can make this work Is to offer people experiences , to go to your suppliers and see how things are created .

So if you're in your local area , you have breweries , you have distilleries , you have wineries and you sell their products . That's your perfect opportunity . Your bar sells through a bunch of beer .

You have a competition to say , hey , whoever sells the most of X breweries beer this month , early next month , five of us are going to go to the brewery and the brewmaster is gonna show us around and show us their whole process . And if you're one of the five people that sells the most , you get to come on this trip .

And they don't have to be far trips , right , stay in the same town . Your employees can drive themselves to the brewery . If it's a little further away , you can get a van or something or a carpool or whatever to get there . But a lot of times you can get suppliers to show you what they do for free .

Show your employees what they do for free Because again , it's gonna help them sell your suppliers products because now they have that story to tell . They have that wonderful tool to reel in your customers and to really push that product out . And a lot of times we think about this in relation to boost .

Now for your backup house , guys say you're doing something a little bit higher end and you're using specific meat from a specific farm . Take your kitchen guys to farm . Let them see the process that the animals go through from when they're born until they're sent for slaughter . Let them see that the grass-fed beef is eating that specific grass .

Let them see the ways that the farm takes care of their animals , because then they have great story and they can help sell the guests . Now is your backup house gonna be in the front of house , much selling to guests ? No , but you need incentives that speak to both sides of the house .

And that is the final note I will give you guys on all these benefits and incentives and things . You have to make sure it's fair between the front and the back . Too often folks in the front of the house get all the fun and folks in the back of the house get to prep and wash dishes .

If you're going to have incentives for your team , you need to have incentives both front and back of house and you need to make sure both front and back of house have the opportunity to win .

Whether that's a profit share program , whether that's some sort of gamified incentive based on KPIs , whether that's trainings , tastings , all those things , you need to make sure both your front of house and your back of house is involved so that no one feels left out and you are not creating division within your bar between different groups of people that work for

you . On that note , I'll let you guys go for the week . If you check out the show notes , there's a link to buy my book how to Make Top Shelf Profits in the Bar Business Down there .

There's a link in the show notes to our Facebook group , bar Business Nation , where we're trying to pull together bar owners , all talking , bouncing ideas off of each other and really trying to grow a community of people to help each other . So have a great week , everybody , and we will talk again later .