Discounted or free employee meals are a common benefit to restaurant workers. When managers offer their employees the chance to taste and enjoy their product, employees feel appreciated. They may even take pleasure in educating and selling the product to others. However, employee meals do need to be recorded and tracked in order to keep inventory and financial statements accurate.
Employee Meal Policies
Employee meals vary between restaurants but usually involve one free or discounted item per shift. Every restaurant does this differently, depending on corporate rules, food type or budget. A restaurant’s employee meal policy might look like one of the following:
- Family-style meals where all employees sit down to eat together before or after a shift
- Any one menu item for free
- One menu item from a select list for free
- 50 percent off any menu item
- 25 percent off any menu item
- Unlimited free soda and water
Family-owned or “mom and pop” restaurants are most likely to offer family-style staff meals before or after a shift, where all employees sit down for lunch or dinner together. This can be a sampling of many meals offered at the restaurant, or something unique that the cook prepares.
At corporate-owned establishments or chain restaurants, employees will often have a choice of several employee meal options. Usually, these are the less expensive menu items, such as bread or pasta. They may also offer a discount of 25 or 50 percent off any other item.
Why Employee Meals are Significant
Although employee meals are considered a benefit in many restaurants, employee meals are important to improving employee morale. Some owners believe that the benefits of providing employee meals outweigh any cost to the restaurant. The benefits include the following:
Increased knowledge of restaurant dishes.
When employees are offered free meals, they are encouraged to taste the dishes, try different things, and find a favorite. This leads to increased knowledge of the food and an improved ability to sell it to customers.
Improved morale in the workplace.
A restaurant that is happy to give employees a meal will usually result in employees who are happier to come to work.
Reduced employee theft.
When employees know they are allowed and encouraged to partake of a free or discounted employee meal, they are less likely to steal from the restaurant.
Employees becoming customers.
Sometimes employees can even receive a discounted meal if they come to the restaurant to eat during their off time. This is one way to turn your employees into customers, who will often bring their friends, family and increased revenue with them.
Employee Meals are Tax Deductible
When you give employee meals, make sure that the cost of those meals does not come out of their wages, as this is illegal. The IRS confirms this in Section 119, stating that any employer providing a meal to an employee on the business premises must exclude that meal from wages and taxes. However, most restaurants can write off their employee meals as a tax deduction in the same way that they can write off charitable donations. Check with your accountant or owner if you are unsure of the tax and wage issues involved in providing meals to your restaurant staff .
It is important that managers track the employee meals they give to employees in order to keep an accurate record of the cost of goods sold (COGS) in the restaurant. Without tracking the food you give to your employees, there is no way to be sure that employees took only one free meal for their shift. Maintaining accountability would become difficult, and any differences in actual food costs versus costs entered into the Point of Sale (POS) system would be hard to investigate.
Many POS systems allow employees or managers to input a food order as an employee meal once per shift. The computer can then record this information and apply it to financial reports. Sometimes it helps to have another employee or a manager ring in the meal over the POS, just to ensure honesty and accuracy of the records.
Clearly Define Meal Policies in Your Restaurant
Make sure that your employee manual or handbook has a defined employee meal policy, and that you communicate this effectively to your staff members. Be sure to clarify the following:
Length and frequency of meal periods.
Be aware that employee meals often happen in tandem with the employee meal periods. Meal periods for food and beverage workers are often mandated by state labor laws, so be sure you know how much time your staff members need for each meal period before setting up a policy.
What foods employees can eat.
If there are certain menu items that employees are allowed for free, these should be absolutely clear. Many restaurants only offer a select few items or limit meals to certain sizes, so managers should explain any specifics to their employees.
Where employees can eat.
Designated break area or break rooms are ideal, especially for restaurants with policies that do not allow employees to sit at tables during their shifts.
When employees can eat.
Essentially, a server or food service worker should never expect to eat on the job. Before the shift, after the shift and during a meal break are the appropriate times to sit down and have a bite.
1 Internal Revenue Service. Training Materials for Employee Meals in the Hospitality Industry. Section 119 http://www.irs.gov/pub/irs-drop/eemeals.pdf (accessed October 26, 2008).