Higher Wages Lead to Long-Term Savings at Illegal Pete’s

February 21, 2019

Since its founding in 1995, the Colorado-based chain Illegal Pete’s has expanded to 11 locations throughout the state thanks to its delicious Mission-style burritos. According to founder Pete Turner, though, the company’s employees have played just as vital of a role in its success story. So in 2011 he decided to show his appreciation by gradually raising wages across the board. “After 15 years, we were able to look forward and say, ‘What do we want this business to look like?’” says Turner.

Today, Illegal Pete’s employees earn a base salary of $15 an hour as well as an average of $4.72 an hour in tips. On top of that, they also receive $3,800 in free meals throughout the year along with other benefits like paid sick leave and health care coverage. Turner says he wanted to present a stand-out example of how restaurants should take care of their workers. “Our industry says people are the most important. Well, let’s treat them like that,” says Turner. “Fast casual [restaurants] were leaders in sustainability, in farming and disposables. OK, that’s great. We can feel good about pigs, cows and the forks we serve, but we’re not paying our staff enough to live on.”

What’s more, Illegal Pete’s generous pay packages could ultimately save the company money in the long-term. Turner says that it costs an average of $1,500 to train front-line employees like cooks and bartenders while replacing a manager requires at least $10,000. Fortunately, the well-paid and happy staff members at Illegal Pete’s don’t tend to leave the company too often. “We barely have any turnover at our company,” says Emily Sanderson, an Illegal Pete’s bartender. “We just grow at our company which is amazing; you don’t really see that in restaurants especially, but it’s different here.” Nevertheless, experts say that not every company can compensate their employees on the same level as Illegal Pete’s. With restaurants located in highly populated cities like Denver and Boulder, the chain earns a ton of revenue that it can then pass on to its workers. Since companies located in less concentrated areas of the country can’t serve such huge customer bases, they are also unable to offer their staff higher pay and benefits.

Questions:

  1. How does Illegal Pete’s generous compensation policy benefit the company in the long run?
  2. Should more restaurants follow the lead of Illegal Pete’s and offer their employees generous salaries and benefits? Why or why not?

Sources: Matt Cortina, “Illegal Pete’s Pete Turner Pays His Employees Close to $20 Per Hour,” Boulder Weekly, January 10, 2019; Meghan Lopez, “Illegal Pete’s Says Paying Employees More Is Saving the Restaurant Money in the Long Run,” Denver7, February 16, 2019. Photo by T.Tseng.

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