How two restaurant groups are working to boost their employees’ enrollment in 401(k) accounts

If you’re familiar with the chaotic, fast-paced environment that characterizes many restaurants—whether through watching The Bear, or working in one yourself—it’s easy to understand how long-term benefits might take a backseat as management seeks to help workers deal with the everyday stress of their jobs.

That tends to be the case with retirement accounts, which haven’t traditionally been offered by employers in the hospitality industry. A recent poll conducted by the financial firm Human Interest and OnePoll found only 44% of hospitality workers are confident they’ll retire comfortably, compared to 66% of finance workers and 78% of tech workers.

But this is changing, according to some restaurant employers and advisors in the space who spoke with HR Brew. State mandates requiring private employers to enroll their employees in retirement accounts, coupled with shifting expectations of total rewards for hospitality workers, are driving more businesses to offer fringe benefits like 401(k) accounts.

How two hospitality employers are approaching retirement benefits. When Kim Lewandowski joined Indianapolis-based Won’t Stop Hospitality eight years ago, a 401(k) program was already in place.

Since then, Lewandowski, the restaurant group’s HR director, has worked to make the benefit more accessible and easier to navigate. She decided to migrate 401(k) accounts to Paychex, a payroll provider, so employees could view their retirement savings in real time and make changes as often as they wanted. More recently, they moved to Empower, which provides more customer support and has lower administrative costs, she said.

Won’t Stop, which oversees six different restaurant concepts, has since opened up the benefit to part-time workers, as well. The account vests immediately, and Won’t Stop matches 100% of contributions on up to 3% of an employee’s salary, and 50% on contributions up to 5%.

Offering the 401(k) accounts is part of a broader focus on building a total rewards package that allows employees to build their career at the company. A lot of employees are college and high school students who tend to be short-term and transient. The owner, Martha Hoover, “really wanted to focus on allowing people to make a career out of this so that they could do it forever. And that included everything from hire to retire,” Lewandowski said.

Common Stock (CS) Hospitality Group, which owns and operates brick-and-mortar restaurants in San Diego, started offering 401(k) accounts in 2022 ahead of a California mandate requiring employers who don’t already offer retirement benefits to enroll their workers in a state plan, or roll out one of their own. The employer partnered with Guideline, which integrates directly with its payroll provider, Gusto, and automatically deducts contributions from workers’ paychecks, according to founder and CEO Brian Douglass. Like Won’t Stop, CS Hospitality will match 100% of employee’s contributions on the first 3%, and 50% on 5%.

Working on enrollment. 401(k) enrollment has varied across CS Hospitality’s portfolio, Douglass said. At their biggest restaurant, which accounted for 78 of their employees, the utilization rate was at 97%, while participation was “just shy” of 70% at their two smaller brick-and-mortar restaurants. He suspects the lower participation rate may be due in part to higher turnover at those restaurants, as well as broader economic conditions that have prompted new hires to make decisions with “a tighter belt in mind.”

CS Hospitality is now winding down its contract at the biggest restaurant where they were operating partners, prompting them to take a second look at the retirement account benefit, he said.

“The best way to retain people is by taking care of them…but if we determine that there are segments of our team that care much more about the [401(k)] match than others? You know, we are open to exploring all of the alternatives,” he said. This might look like switching to a provider like the state-sponsored CalSavers, which doesn’t require an employer match, or exploring deferred compensation programs for management employees, which tend to be more interested in saving for retirement.

Both Douglass and Lewandowski said they’re hoping to lean in on promoting the benefit to boost enrollment, as well. Even though retirement benefits have been offered to Won’t Stop Hospitality employees for more than a decade, just under 100 of the company’s roughly 370 employees are active participants, Lewandowski said. Most who contribute are those in a leadership position, rather than hourly workers. Won’t Stop has partnered with Northwestern Mutual to help advise employees on the benefit, and held its first “401(k) week” last year, when workers had the chance to sit down with advisers onsite.

“We find with people who are really young, they live very paycheck to paycheck. And so it’s scary to them to put 5% into a 401(k). They want their money now,” she said. “So, we encourage people to start just with 1%.”