With its tight margins, restaurateurs need to be careful where they spend their money. For decades it’s been believed that benefits like paid time off were impossible in this industry. However, now that some states have made it mandatory for restaurants to provide paid sick leave, many restaurant owners are finding that the benefits are outweighing the costs.
Costs and Benefits of Providing Paid Sick Leave to Your Restaurant Staff
In March 2020 a proposed bill to require restaurants to provide 14 days of paid sick leave amid the coronavirus pandemic was struck down. It was argued that the economic impact would be too great a burden on small business owners, but a first of its kind study by the National Bureau of Economic Research found that is not the case.
According to Jessica Wu from The Counter, “researchers found that local versions of the policy increase the proportion of the workforce covered by paid sick leave by 20 percent and encourage workers to take an average of two days off for illness per year—all at the cost to employers of about 20 cents per hour worked by an employee.”
Though the cost of paid sick leave is much less than previously believed, there are a number of benefits to the employer that exceed the costs.
Reduced Staff Turnover
One of the biggest costs in the restaurant industry – in terms of both time and money – is staff turnover. In order to keep high-performing staff in their restaurants, many business owners have found success with offering benefits with paid time off being one of the most common.
Employees who showed up to work sick predictably perform worse than they would if they were well. This is known as “presenteeism” and it costs the national economy $160 billion annually according to a 2003 study, which is about $234 billion today when adjusted for inflation. This cost is higher than if the employee had not shown up for work at all.
As mentioned, most workers will come into work sick in order to not miss out on a portion of their paycheck. This compromises the health of the rest of the staff and your guests. Plus, no negative Yelp reviews from a customer turned off by a coughing, sniffling server.
Restaurants That Are Successfully Managing Paid Sick Leave for Their Employees
A growing number of states now require employers to provide paid sick leave to employees, but there’s no federal law on this issue, so operators handle it differently. Here are a few businesses who have found success and value in providing paid sick leave for their employees.
Narrative Coffee – Everett, WA
Maxwell Mooney, founder and co-owner of Narrative Coffee, has been providing paid sick leave since before it was required by law; the coffee shop opened in the summer of 2017 and Washington state’s mandatory paid sick leave policy went into effect on January 1, 2018.
Despite this, Mooney felt it was important to provide paid sick leave to his employees from the start. “As a small business we really don’t have the means to provide a ton of additional benefits,” he says. “We felt like that was a really important thing to offer, regardless of whether it was a state law or not.”
Under Washington state’s current law, most employers must provide paid sick leave, with employees accruing paid leave at a rate of one hour per every 40 hours worked. In addition, up to 40 hours of accrued sick leave must carry over to the following year. Narrative Coffee employees accrue paid sick leave at that same rate.
Other small business owners argue that state-mandated paid sick leave cuts into already tight margins. “The margins are definitely tight in this business,” Mooney admits. “It’s not like we’re raking in the money all the time but taking care of your people now is going to reap positive benefits for your business later.”
Paid sick leave hasn’t created a significant cost for Mooney’s business, and he or another team member is usually able to fill in when someone is out sick. “Morale is much higher so folks are willing to help pick up the slack,” he says. “Everyone’s a team player and they want to see the team succeed.”
Mooney feels strongly about the importance of paid sick leave in restaurants like his. “If your staff is being taken care of then they can take care of your guests better,” he says. “The overall feeling of your staff means better business. I think there’s a good amount of return on investment in offering sick leave, but it’s not as easy to quantify on paper.”
Honey Butter Fried Chicken – Chicago
Honey Butter Fried Chicken, a counter-service restaurant in Chicago, has offered paid sick leave since opening in September 2013. “We really believe that it is crucial that our people can take care of themselves,” says executive chef and managing partner Christine Cikowski. “We don’t want sick people making food. [The policy is] respectful to our customers.”
Paid sick leave also discourages restaurant employees from coming to work and sharing their germs with coworkers, says executive chef and managing partner Josh Kulp. “We work in close quarters so if someone is sick at work it really can cascade,” he adds.
To keep operations running smoothly when someone is out of commission, “we try to cross-train as much as possible so people can jump in various positions,” Kulp says. “Front-of-house is trained to do back-of-house in the kitchen and vice versa.”
If they need to call an extra person to come in on their day off, they find that most people want to pick up an extra shift. “Once in a while that might include having to pay overtime, so we factor that into our budgeting and planning,” Kulp adds.
Cikowski and Kulp believe so strongly in providing paid sick leave and otherwise professionalizing their industry that they sat on the Chicago mayor’s task force to make recommendations on a city ordinance around paid sick leave. The ordinance went into effect on July 1, 2017, and applies to employees who work more than 80 hours within a 120-day period. “The data supports that by taking care of your employees it keeps them here longer which translates to better sales, better customer service and lower turnover,” Cikowski says.
Chef Wayne Elias – Los Angeles
In California, where chef Wayne Elias co-owns Los Angeles-based Rockwell Table & Stage and Crumble Catering, the state’s paid sick leave law went into effect on July 1, 2015. Elias says people don’t tend to call in sick unless they’ve recently given their notice (when you leave the job, you don’t get paid out for unused sick time). “The waiters and the servers are looking for more hours,” he says. “They would show up to work sick and I would have to send them home.”
When Elias has to send someone home sick, he asks them to put themselves in the customer’s shoes. “If you took your mother or a girlfriend out and a server walked up to you who appeared to be sick, wouldn’t you be a little concerned?” he says.
For Elias, the most challenging hole to fill is when a bartender is out sick, because not everyone has the proper bartender training. “Me as a manager that knows how to bartend could jump in or sometimes you have a server that you could throw into that position,” he says.
When a kitchen person or a server is out sick, sometimes if it’s not busy, he can get by with one fewer person. “Nobody knows on the floor if something is off,” Elias adds. “It’s like going to the theatre; the show must go on.