Taco Bell will soon begin testing a $100,000 annual salary for general managers in select locations in an attempt to attract and retain talent, the company said Thursday in a statement about its 2020 plans.
“As we grow the Taco Bell business, we’re really focused on managers,” Ferril Onyett, senior director of global training and international human resources at Taco Bell, said Friday. “They have a huge impact on restaurant performance. We hope through this test we can evaluate the effect on not only restaurant performance but team morale, customer experience and recruitment and retention.”
Taco Bell, which is owned by Yum Brands Inc., also announced that it would give employees at least 24 hours paid sick time per year and that it would make consumer packaging recyclable by 2025.
Salaries for general managers at company-owned stores range from $50,000 to $80,000, depending on time in the role, location and experience, Onyett said, adding that the corporation cannot mandate salaries for restaurants owned by franchisees.
It’s still unclear how long the test will run or which of the company’s more than 6,600 locations will be selected, but Onyett said the test will take place “later this year” and that the company is still in “planning phases.”
Taco Bell’s planned test demonstrates the company is prepared to put more money into its staff and into company-owned stores in an effort to boost performance, Neil Saunders, managing director of retail at GlobalData, said Friday. “It obviously feels confident enough to be able to really provide such a sharp increase in salaries of people running those outlets,” he said.
“I think it’s a necessary move because I think the labor market is now extremely tight,” Saunders said. In order to attract good talent, companies have to pay for it and give good benefits, he added.
“It’s certainly the case in the fast-food industry that there can be high turnover, even at management levels, and that has a detrimental impact on how stores are run,” he said. “A good manager in an outlet can make a difference between that store being really successful or being pretty mediocre in terms of performance.”
The test by Taco Bell could also create a ripple effect among fast-food companies.
“I think it does signal the costs of running fast-food outlets could be going up,” Saunders said, adding that if one company starts to make a move in terms of salaries, it could put pressure on everyone else to follow suit.
In-N-Out Burger, which has locations in the western United States, already pays its managers well, Saunders said. “It’s a really successful fast-food outlet because its managers are fully invested in running the stores well and efficiently.”
A request for comment from In-N-Out Burger regarding its salary range for managers was not immediately answered Friday. Neither were requests for manager salaries at McDonald’s, Burger King and KFC.
The fast-food industry has undergone a number of changes in recent years. Restaurants have started offering plant-based options to customers, and employees have pushed to raise the minimum wage. In 2019, a bill was introduced in Congress that would raise the federal hourly rate to $15 from $7.25 over five years. The bill passed in the House in July. In January, the minimum wage went up in 22 states, increasing pay for about 7 million workers, who will take home an extra $8.2 billion over the year.
Taco Bell’s manager salary announcement came the day before the Labor Department released its monthly jobs report.
The U.S. added 145,000 jobs in December, while analysts had expected about 160,000 to be gained. It ended a year of steady but slowing gains in employment. For wages, growth was disappointing at 2.9% over the last year, far below the 3.4% height it reached in February. Wage growth for managers in December also slowed.