Going Rate For A General Manager

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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 $35k - $150k 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 average and more with where they fall in terms of hours working and opportunity being offered (provided, of course, your getting the culture right).

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 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 a global perspective that includes: capital expenditures, hidden occupancy costs, the price of commodity futures, debt service and or the financial performance of additional outlets when applicable.

This can be cured, in part, by exposing management more to the direct and indirect finances associated with the establishment.

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 $18MM in gross sales - an owner may not be able to justify as large an increase in salary if they are first committed to paying all GMs and ECs a competitive salary commensurate with their experience.)

That being said, every owner holds the opportunity to incentivize and compensate a GM or Chef beyond the salary with which they might be growing restless or a quarterly bonus of $5k-$10k, by either A.) improving the culture, B.) giving Them more support (assistant managers or hourly "hammers" 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.

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 in the exit strategy for you or anyone else who is not looking for one but if all of the other pieces are there - opportunity may be the one missing piece.

It’s not a bad deal. After all...you have one party realizing their greatest dream - and another freeing themselves up and earning a set % every month.

I will share your question on our closed Facebook group to see if there are any other thoughts...