need advice on salary and bonus negotiations

[masterxfob]

i've been working in restaurants for around 10 years, and the last 2 years of it in management. within the two years of management, i increased the yearly net sales from $950K to $1.25 million and my salary went from $36k to $40k with a $50 'bonus' for Christmas. needless to say, i left pretty soon after the raise and the $50 Christmas bonus.

recently i was offered a management position for a full service restaurant in downtown Los Angeles, and was asked for a figure. i wasn't given exact numbers, but yearly net sales are around $750k and there's a lot of room for improvement. the restaurant is open monday to friday for breakfast and lunch, so the hours are pretty awesome for a restaurant.

from salary.com, the average salary for this type of position in Los Angeles is ~$50k. i don't want to sell myself too low and i definitely don't want to turn them away with a figure that's too high. i also need to find out how a performance based bonus generally works in this field.


i have no idea how a quarterly type bonus would work, but here's kind of what i've been thinking about:

0.5% keep FC (food cost) within x-y%
0.5% $210-240k net sales per quarter
1.0% $240-270k net sales per quarter
1.5% $270-300k net sales per quarter
2.0% $300k+ net sales per quarter

so if i maintained FC and sales for the quarter were $275k, then i would get 2% total net sales for a bonus. i think it may be high, but considering quarterly sales are under $200K, i think it's fair. then again, this is all new to me, and the reason i'm trying to find some help.

anyhow, i was planning on asking for $51k per year ($4250/month), quarterly bonus (however that works...), and two weeks paid vacation. considering i only have two years of management experience and am only 26, i think i am asking a lot, but i think i have a pretty good track record.

i know this is ATOT and i don't expect everyone to be helpful, but i do know that we have some professionals here. hopefully some of you can reply. if it's a matter of business, i'd definitely be willing to discuss it over the phone. next monday i will be negotiating my salary, so i need some input before then.

please help me!

 

[Whoozyerdaddy]

I don't know anything about the restaurant industry but tying your bonus to company performance is a good thing. If you make them more money they should pay you. That is why they hired you after all isn't it?

Negotiate a solid base and set bonus money to performance goals. That's a good way to go.

 

[masterxfob]

after i got screwed at my last job, i need to make sure i get paid if i'm going to make someone hundred of thousands of dollars.

i should've posted this tomorrow, but i just had coffee with my prospective employer, and can't fall asleep; too much is going on in my head right now

 

[RichardE]

One thing I noticed, is previous company gave you 1.3% of the sales you got them. From my understanding of the food business (with its razor thin margins) that seems like alot, besides the fact, if we look at your chart and previous experience/results we get this.



187500 (sales before you)
+75k more a quarter (based on previous experience) (300k yearly/4 quarters)

262500 per quarter (Total sales since you arrived, 75k more)


So based on your percentage at 1% of 75k (based on 1.0% $240-270k net sales per quarter )

Your bonus would be 750$ bonus per quarter


Every 4 quarters and total bonus would be 3 grand.

You got a 4 grand raise for this exact same work. Something to think about.

 

[gsethi]

your %age analysis is wrong.

You should only ask for %age on the increase in sales that have resulted due to your efforts. For Ex:
Today, sales are ~250k/qtr average.
Tomorrow, you start managing the business and sales go upto 275k/qtr average

You should get 1% on the difference of 25k (275-250), not on entire 275k. The previous average of 250k is not yours, its someone else's efforts.
Also, asking 0.5% of Food Cost is just plain ridiculous....its your JOB to keep food cost under control and if you are able to take it down even further, thats just more job security for you. (I would want you to increase the sales and customer count, even if the FC goes up a little but still under my max threshold and keep a tight control on labor)

For someone with your level of experience, salary would be ~45k + medical insurance (no dental/eye etc) + whatever else the owner feels like giving + Chrismas Bonus (usually ~10-15days salary).

For %age bonus to take effect, dont expect them the qtr after you start managing. Your increased sales have to last for a long time. For ex: you start managing in April and sales go up for Qtr 2 to 260k. Dont ask for anything at the end of Qtr 2, first do the same for Qtr 3 and then ask for %age bonus. It could be that sales for Qtr 3 might go back down to ~240-250k and Qtr 2 was just a regular seasonal increase in sales.

Also, you said that in your previous job, you increased the sales from 950k to 1.25 million (difference of 300k). You also have to take into account any increase in Food Cost, Labor, rent, other expenses, price increases etc etc. If I was your boss, I would mainly be concerned with increase in Customer Count more than increase in sales. Increase in sales with the Same customer count means you increases prices on menu = went with inflation (it is not more profit for the business when adjusted for inflation).

 

[masterxfob]

Originally posted by: RichardE
One thing I noticed, is previous company gave you 1.3% of the sales you got them. From my understanding of the food business (with its razor thin margins) that seems like alot, besides the fact, if we look at your chart and previous experience/results we get this.



187500 (sales before you)
+75k more a quarter (based on previous experience) (300k yearly/4 quarters)

262500 per quarter (Total sales since you arrived, 75k more)


So based on your percentage at 1% of 75k (based on 1.0% $240-270k net sales per quarter )

Your bonus would be 750$ bonus per quarter


Every 4 quarters and total bonus would be 3 grand.

You got a 4 grand raise for this exact same work. Something to think about.

razor thin margins? if that were the case, there wouldn't be many people in the field. i'd say anywhere from 20-40% depending on the setup.

no, i meant a percentage of total net sales for the quarter, not just the increase. from your math, i'd get $4k bonus for increasing sales $300k, or 40%. i just don't think that's right. i've got friends making a $2K per quarter and they're not increasing sales anywhere near 40%.

 

[gsethi]

Originally posted by: masterxfob
after i got screwed at my last job, i need to make sure i get paid if i'm going to make someone hundred of thousands of dollars.

i should've posted this tomorrow, but i just had coffee with my prospective employer, and can't fall asleep; too much is going on in my head right now

Based on ~750k annual sales, the owner is NOWHERE making hundred of thousands of dollars. If you can tell me the name of the place and how big it is, I can give you a rough idea on how much he is making but If I were to just make a blind guess, i would say somewhere close to ~100k (I wouldn't be surprised it if it actually less than 100k)

 

[gsethi]

Originally posted by: masterxfob

Originally posted by: RichardE
One thing I noticed, is previous company gave you 1.3% of the sales you got them. From my understanding of the food business (with its razor thin margins) that seems like alot, besides the fact, if we look at your chart and previous experience/results we get this.



187500 (sales before you)
+75k more a quarter (based on previous experience) (300k yearly/4 quarters)

262500 per quarter (Total sales since you arrived, 75k more)


So based on your percentage at 1% of 75k (based on 1.0% $240-270k net sales per quarter )

Your bonus would be 750$ bonus per quarter


Every 4 quarters and total bonus would be 3 grand.

You got a 4 grand raise for this exact same work. Something to think about.

razor thin margins? if that were the case, there wouldn't be many people in the field. i'd say anywhere from 20-40% depending on the setup.

no, i meant a percentage of total net sales for the quarter, not just the increase. from your math, i'd get $4k bonus for increasing sales $300k, or 40%. i just don't think that's right. i've got friends making a $2K per quarter and they're not increasing sales anywhere near 40%.

You are way out of your league here.....Obviously, you dont know what you are talking about. I wouldn't need to work at my restaurant if I was making anywhere close to 20% Net profits after all costs (Rent, Food, Supplies, Labor, Taxes, Misc etc etc). I can imagine 20% if the owner is working there more than Full time and is on an old lease (not paying today's market rent)

if you are expecting %age bonus on NET sales, dont even bother applying....no sane owner is going to give you that. You will only get %age based on the increase in sales b/c of you, not on the entire sales.

Again, if you PM me the name of the restaurant (or the type of restaurant), how big it is and the name of the franchisor, if any, I can give you a pretty good guess on what the owner is actually making based on 750k annual sales.

750k annual sales = ~62.5k monthly sales. I see so many big franchisee restaurants here in the SF Bay area that are loosing $$$ every month or just breaking even with those sales figures after all expenses are paid.

 

[masterxfob]

Originally posted by: gsethi
your %age analysis is wrong.

You should only ask for %age on the increase in sales that have resulted due to your efforts. For Ex:
Today, sales are ~250k/qtr average.
Tomorrow, you start managing the business and sales go upto 275k/qtr average

You should get 1% on the difference of 25k (275-250), not on entire 275k. The previous average of 250k is not yours, its someone else's efforts.
Also, asking 0.5% of Food Cost is just plain ridiculous....its your JOB to keep food cost under control and if you are able to take it down even further, thats just more job security for you. (I would want you to increase the sales and customer count, even if the FC goes up a little but still under my max threshold and keep a tight control on labor)

For someone with your level of experience, salary would be ~45k + medical insurance (no dental/eye etc) + whatever else the owner feels like giving + Chrismas Bonus (usually ~10-15days salary).

For %age bonus to take effect, dont expect them the qtr after you start managing. Your increased sales have to last for a long time. For ex: you start managing in April and sales go up for Qtr 2 to 260k. Dont ask for anything at the end of Qtr 2, first do the same for Qtr 3 and then ask for %age bonus. It could be that sales for Qtr 3 might go back down to ~240-250k and Qtr 2 was just a regular seasonal increase in sales.

Also, you said that in your previous job, you increased the sales from 950k to 1.25 million (difference of 300k). You also have to take into account any increase in Food Cost, Labor, rent, other expenses, price increases etc etc. If I was your boss, I would mainly be concerned with increase in Customer Count more than increase in sales. Increase in sales with the Same customer count means you increases prices on menu = went with inflation (it is not more profit for the business when adjusted for inflation).

if bonus % should only apply to the amount of increased sales, it needs to be significantly larger than 1%.

i understand that the previous sales were not mine, but maintaining and increasing is the goal. this is basically a sales type of job and what sales job pays 1% commission?

yes, it's part of the job, but a regional manager told me that a bonus is usually in order when maintaining FC.

this is a small business, i won't be getting medical/dental so i felt the need for an average salary at the minimum.

i've already discussed that i'm expecting quarterly bonus' with my propesctive employer. said person wants me to come up with figures to discuss next week, so i am expecting bonus' from the start.

i managed the store for two years, i knew everything there was to know. i knew all the numbers, i reviewed the p&l's, and i know that increasing sales 30% over two years should be granted more than a $4k raise and $50 bonus.

menu prices increased 5% over the two years, not 30%. customer count was slightly up, but check price was up significantly.

may i ask your profession? or experience in the restaurant industry? i'm just curious since you seem to know something about this, but at the same time i'm doubting you know too much. no offense meant.

 

[gsethi]

Originally posted by: masterxfob

Originally posted by: gsethi
your %age analysis is wrong.

You should only ask for %age on the increase in sales that have resulted due to your efforts. For Ex:
Today, sales are ~250k/qtr average.
Tomorrow, you start managing the business and sales go upto 275k/qtr average

You should get 1% on the difference of 25k (275-250), not on entire 275k. The previous average of 250k is not yours, its someone else's efforts.
Also, asking 0.5% of Food Cost is just plain ridiculous....its your JOB to keep food cost under control and if you are able to take it down even further, thats just more job security for you. (I would want you to increase the sales and customer count, even if the FC goes up a little but still under my max threshold and keep a tight control on labor)

For someone with your level of experience, salary would be ~45k + medical insurance (no dental/eye etc) + whatever else the owner feels like giving + Chrismas Bonus (usually ~10-15days salary).

For %age bonus to take effect, dont expect them the qtr after you start managing. Your increased sales have to last for a long time. For ex: you start managing in April and sales go up for Qtr 2 to 260k. Dont ask for anything at the end of Qtr 2, first do the same for Qtr 3 and then ask for %age bonus. It could be that sales for Qtr 3 might go back down to ~240-250k and Qtr 2 was just a regular seasonal increase in sales.

Also, you said that in your previous job, you increased the sales from 950k to 1.25 million (difference of 300k). You also have to take into account any increase in Food Cost, Labor, rent, other expenses, price increases etc etc. If I was your boss, I would mainly be concerned with increase in Customer Count more than increase in sales. Increase in sales with the Same customer count means you increases prices on menu = went with inflation (it is not more profit for the business when adjusted for inflation).

if bonus % should only apply to the amount of increased sales, it needs to be significantly larger than 1%.

i understand that the previous sales were not mine, but maintaining and increasing is the goal. this is basically a sales type of job and what sales job pays 1% commission?

yes, it's part of the job, but a regional manager told me that a bonus is usually in order when maintaining FC.

this is a small business, i won't be getting medical/dental so i felt the need for an average salary at the minimum.

i've already discussed that i'm expecting quarterly bonus' with my propesctive employer. said person wants me to come up with figures to discuss next week, so i am expecting bonus' from the start.

i managed the store for two years, i knew everything there was to know. i knew all the numbers, i reviewed the p&l's, and i know that increasing sales 30% over two years should be granted more than a $4k raise and $50 bonus.

menu prices increased 5% over the two years, not 30%. customer count was slightly up, but check price was up significantly.


may i ask your profession? or experience in the restaurant industry? i'm just curious since you seem to know something about this, but at the same time i'm doubting you know too much. no offense meant.

Currently own a Franchisee restaurant in the SF Bay area...About to take over another next month and in talks for the 3rd one.

I do all the finances for my store, so I know more than you about the expenses. Those P&L statements that you are talking about are not the entire truth....I can just tell by looking at one on where the owner is lying when one is trying to sell his business. 95% of the PL statements that I have seen so far are pure BS (in reality, the business it not even making anywhere close to those figures). Those figures are there just to get loans and/or when the owner wants to sell his business.

Maintaining the current sales is your JOB for which you are getting a base salary. Increasing them is your GOAL on which you are expecting a %age bonus.

Increasing sales by 30% doesnt mean that the profits of the business went up by 30%. Again, as an owner, I would be more inclined towards increased customer count rather than increased sales/check price.

Again, if you tell me the name of the place or the type of restaurant and how big (sq ft) it is, I can give you a pretty clear idea on what the owner is making....

EDIT: in your 1st job, you got an 11.11% raise in the first year which is not bad. I agree that the $50 Christmas bonus was on the lower side if you were the Restuarant Manager (not assistant manager etc). A typical restaurant manager should get ~5-15 days worth of salary for Christmas depending on performance. Assistants will get ~1-5 days worth of salary.

A 30% annual increase in sales would probably have gotten you 15 days worth of salary from me for Christmas and an annual raise of ~15-20% (that is only if the restaurant was in the GREEN). It could be that after the 30% increase in sales, the restaurant barely made it to GREEN and thats why you got a smaller raise and little Christmas present. Again, you are viewing from an employee perspective, not from owners.

Also, by taking a guess based on the info you have provided, the new restaurant is a sandwich type restaurant somewhere in downtown area surrounded by tons of offices. This also means that the rent is going to be quite high for that place along with higher CAM and/or NNN charges.