Most would agree, incentive bonuses are critical in the QSR space. However, there’s no one-size-fits-all approach to designing an effective bonus plan. The challenge lies in creating a structure promoting positive behaviors while aligning with the owner’s best interests—particularly for low-volume stores.
The foundation of a successful bonus plan is transparency, simplicity, and measurable targets. Consistency is key. Apply the plan fairly and avoid concessions where possible. Also avoid changing the plan, especially throughout the year. Moving targets are not only confusing but end up disappointing team members. While it’s reasonable to account for unprecedented events—like power outages or temporary closures—employees need clear and stable targets to stay motivated.
- Food/Labor – A strategic bonus plan should always tie the bonus to the food and labor variance vs. ideal. These are core drivers of operational efficiency and profitability.
- Sales – You would be amiss to not factor in overall sales in some way. If the store is low volume, bonus targets and the overall pool should be adjusted accordingly.
- EBITDA (Earnings before interest, tax, depreciation and amortization)– In addition to food and labor, overall EBITDA should be factored into the bonus to incentivize good behaviors for the managers. This drives behaviors benefitting the business holistically.
For higher-level team members, reducing turnover, ensuring customer satisfaction, and securing annual sales growth could also be considerations.
If you’re ready to refine your approach and model a bonus plan tailored to your needs, reach out to HORNE Franchise today. Let’s work together to build a plan driving results!
