Compensation: Human Capital

The Capital Grille invests a lot in its managers; the returns are high sales and happy hourlies.

By Mary Boltz Chapman, Editor-in-Chief -- Chain Leader, 4/1/2006

“Just your association with a restaurant of the caliber of The Capital Grille is highly beneficial to your career,” it reads in the management-careers section of The Capital Grille’s Web site. “But we ensure that your compensation and benefits package is handsomely rewarding, too.”

John Martin, president of the 23-unit high-end steakhouse chain, says there are a lot of reasons that managers want to join the concept and why they stick around, including the company’s culture and values, and the opportunities for training and advancement it offers. But he adds that compensation is a component. “We have high expectations of our people,” Martin says. “We expect a lot, and we pay a lot.”

Spread the Wealth
“A lot” could mean up to $200,000 in salary and bonus for managing partners, who have an equity stake in the business. “All of our managing partners and general managers make in excess of $100,000,” Martin says, and that’s just base salary.

Generally bonuses comprise between 10 percent and 40 percent of their pay.

Managers’ compensation is in the $50,000 to $100,000 range; 15 percent to 20 percent of that is their bonus. In the back of the house, sous chefs are paid under a similar structure. Executive chefs earn between $75,000 and $100,000.

The Capital Grille plans to implement an equity-stake program for executive chefs this year.

The broad salary scale is partially due to the variations of cost of living in different locations, for example New York vs. Charlotte, N.C. But it also has to do with Capital Grille’s bonus structure, which consists of just two components: sales and profitability. “We don’t have moving targets,” Martin says. “It’s really straightforward, and it’s really a function of those two things that they control. I’ve had people try to explain their bonus program to me, and I think, I should have studied calculus.”

According to Martin, because the program is measurable, there aren’t any surprises for the manager. “Our people have been very happy with the program, based on the low turnover that we have,” he says.

Beyond the Paycheck
For the last few years, Capital Grille’s management turnover has averaged less than 15 percent and close to 10 percent. Unit-level hourly turnover is in the low 40s. “The turnover rate of hourlies speaks volumes to GM turnover,” Martin says. “If you have high manager turnover, you tend to have high staff turnover. It’s important to staff to have consistent management.”

He adds that the low hourly turnover allows managers to concentrate on the customer and running a great business.

Capital Grille managers also appreciate a benefits plan that includes major medical, dental, life and disability insurance; paid vacation, holidays and personal days; a 401(k) plan; employee-assistance program; and tuition reimbursement. Benefits grow as tenure increases; for example, managers with 10 years of service or more receive money to use toward their vacation.

They also take advantage of the chain’s training opportunities, and many benefit from the advancement opportunities that come with a growing concept, according to Martin, who himself began working as a server for Capital Grille founder Ned Grace at Hemenway’s, which is also owned by Atlanta-based Rare Hospitality. Martin was one of the original managers when Capital Grille opened in 1990.

Capital Grille opened three units in 2005, and plans another three for this year. The chain’s 2005 systemwide sales topped $165 million.

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