Italian Market Café

The task of finding, keeping, and motivating good employees is one of the greatest challenges facing Independent restaurateurs today. At times, it may even seem like the owner is the only one who’s truly motivated to get the job done right. As the old saying goes, “l’occhio del padrone, ingrassa il cavallo” (“The watchful eye of the owner is what fattens the horse”).

Nevertheless, restaurateur John Labalestra thinks he’s found an effective, albeit radical solution to motivating his employees. Since ownership is such a powerful motivator, John figured, why not make all his full time employees “50% owners” by giving them half the restaurant’s profits on a monthly basis.

How the 50/50 Bonus Program Works

In addition to their base pay (which is competitive with area restaurants), John’s full time employees are included in a monthly bonus pool.

To calculate the size of the pool, John begins with the “bottom line” from the restaurant’s monthly profit and loss statement (before depreciation and taxes). Then, since the restaurant must continually reinvest in its building and equipment to remain healthy, John deducts any of the restaurant’s cashflow items not already expensed (e.g., loan principal payments, machine purchases, etc.).

Remaining funds are then split 50/50 between John and the employee bonus pool. Each employee’s share of the pool is determined by dividing his/her wages for the month by the size of the restaurant’s total payroll for the same period.

Emphasizing Long Term Commitment

While half of each employee’s bonus is paid in cash, John demonstrates his long term commitment to his employees (many of whom have been with the restaurant for years) by depositing the other half into their Individual Retirement Accounts.

Bottom Line Results

Skeptics might ask, “If employees are already paid to do their jobs, why should they get a cut of the profits too?” The answer, says John, is that with the narrow profit margins at most restaurants, motivating your employees to increase their efficiency can have a disproportionately BIG IMPACT on profitability! Without revealing specifics, John confides that after three years of the 50/50 split, he’s discovered that his original goal of doubling his personal bottom line had been “conservative.”

John believes his program works by giving each employee a personal stake in the bottom line. “I tell them, it’s like you are really in business for yourself … but without having to invest any money.” As a result, his employees pay closer attention to increasing customer satisfaction and to reducing waste and inefficiency.

And since John’s employees enjoy higher than average compensation (plus the personal fulfillment of knowing that what they do really matters), costly absenteeism and employee turnover rates have been dramatically slashed. Finally, as the word has spread about Italian Market Café’s innovative 50/50 bonus program, John has a waiting list of highly qualified people who want to become an employee!