Can Your Company’s Education Benefits Keep Up With a Fast Food Chain?

February 6, 2015
Hamburger

Not long ago, the fast food industry was a pretty low bar to set when it came to employee benefits. Now some are best in class. Can your company compete?

The bar to recruit and retain young unskilled and semi-skilled workers is getting higher. After a long drought, this spring and early summer saw a round of fast food industry employers roll out substantial tuition assistance and other education-related benefits, in an effort to lure in and retain the best workers and prepare them for management duties and career tracks within the industry.

Starbucks started the ball rolling last year, when it announced a program to help workers attain an associates degree at ASU via a tuition reimbursement program. And this year, a number of other food service businesses are piling in, even in the historically low-wage fast food sector.

Background

Not long ago, the fast food industry was a pretty low bar to set when it came to employee benefits. In fact, other than for salaried management, there were frequently none. And precious little opportunity for advancement for rank and file fast food workers. In states that mandated health insurance coverage for full-time employees, it was even tough to get full-time hours to qualify.

As the labor market gradually tightens, though, that’s starting to change – and even rank and file cashiers and food line workers are starting to get access to meaningful benefits through their employment. In some cases, its local franchises leading the way, but these employers are sweetening their education benefits at the local and national level alike.

The latest major employer to announce an expansion of benefits to their rank and file employees, to include part-time employees, is Chipotle.

Chipotle

Specifically, Chipotle is now granting vacation time, sick time and a tuition reimbursement program to all employees full-time and part-time alike, right down to the entry-level bean-slinger. Chipotle’s reimbursement program is worth up to $5,250 per year, which is the maximum amount of assistance employees can receive tax-free.

The Chipotle announcement came three months after Starbucks announced it was expanding its existing tuition reimbursement program to include four-year programs – up from the two-year programs it was willing to support previously. To qualify, Starbucks employees must log 20 hours per week.

Chipotle also sponsors a 401(k) program for hourly employees, via Transamerica. Complete with a match:

  • 100 percent dollar-for-dollar on contributions up to 3 percent of compensation.
  • 50 percent match on the next 2 percent of compensation.
  • 100 percent immediate vesting of employee and employer contributions.

Starbucks

Starbucks also souped up its tuition reimbursement program by announcing it was reimbursing employees every semester instead of after 21 class credits. Starbucks’ program is in partnership with Arizona State University. The company projects that at least 25,000 employees will graduate using this program over the next ten years.

Employees have no ongoing commitment to remaining with Starbucks after graduating.

Some observers have criticized the Starbucks plan for being limited to Arizona State University. However, there’s a reason behind it: In exchange for the substantial flow of enrollees from the Starbucks program (over 2,000 already), ASU has discounted their normal tuition by 42 percent, according to reporting from The Wall Street Journal.

McDonalds

McDonalds, for its part, has partnered with the College for America at Southern New Hampshire University – a non-profit, degree-granting institution.

McDonalds had been offering a limited tuition reimbursement program since 2001, but their management had been frustrated seeing their students enroll in relatively expensive private, for-profit institutions, and then found themselves unable to complete their degrees, yet still burdened with student loans for tuition and fees over and above what McDonalds provided. That’s why one McDonalds franchise company, the 51-restaurant Caspers Company McDonalds in Tampa, Florida, chose to partner with College for America: The institution structured itself to keep tuition down to a relatively manageable $2,500 per year per student. College for America is aggressively marketing themselves to employers in this niche, as an affordable option to help lower-wage workers actually complete their degrees. Currently, the College for America issues bachelors degrees in healthcare management and in communications, and associates degrees in two fields: general studies with a concentration in business, and general studies for nonclinical healthcare.

That particular McDonald’s program is limited to Caspar-owned and operated restaurants. However, the McMother Ship also has their own program for all other employees: After a year on the job, rank-and-file restaurant crew members who work an average of 20 hours per week can qualify for $700 in tuition assistance per year, and full-time restaurant management and staff of participating franchise owner/operators working over 30 hours per week can qualify for as much as $1,050 per year, good at any institution accredited by the U.S. Department of Education.

While the McDonalds program is not as rich as the Starbucks program, it does have one feature most struggling workers will appreciate: McDonalds pays up front, instead of reimbursing students on completion. So McDonalds employees can take advantage of the plan without spending anything out of pocket. The company writes the check directly to the educational institution.

Dunkin Donuts

The Wolak Group, which operates over 85 Dunkin Donuts locations in New Hampshire, New York and Maine, also announced their own partnership with College for America this spring, in a pilot program designed to allow 25 employees to earn their associates degrees. If successful, the company plans to make the benefit available to all 1,600 employees. Meanwhile, Dunkin Brands, the parent company, offers up to $5,000 in tuition reimbursement to eligible employees.

KFC also has a tuition assistance program available on a competitive basis for qualified applicants, including hourly rank and file employees, totaling 1.6 million for 2015-2016 academic year. This program is run by the KFC Foundation, a non-profit organization supported by franchisees and the KFC corporation. The awards generally total $2,000 per applicant selected.