Cava Grill, the fast-casual Mediterranean chain, has raised its starting wage to $13 an hour and begun offering paid sick and parental leave to its 600 hourly workers, in a move that executives hope will help the company attract and retain employees.
The starting wage at the Maryland-based company was previously $10.50.
“This is going to help relieve, hopefully, some of the financial stress our employees are feeling as they support themselves and their families,” said Brett Schulman, chief executive of Cava. “Our industry has to understand that these are household jobs for a lot of folks.”
A number of employers, locally and nationally, are rolling out increases in hourly pay. District-based chain &pizza last month raised its starting wage to $11.75 an hour. On Monday, Starbucks announced it would give its employees pay raises of at least 5 percent. The following day, Jamie Dimon, chief executive of JPMorgan Chase, said the company’s hourly workers would make $12 to $16.50 an hour by 2019.
“A pay increase is the right thing to do,” Dimon wrote in the New York Times. “Wages for many Americans have gone nowhere for too long.”
Cava’s announcement came weeks after D.C. lawmakers approved a bill that would raise the District’s minimum wage to $15 an hour by 2020. The hourly minimum wage is $11.50 in the District, $8.75 in Maryland and $7.25 in Virginia. (The federal minimum wage is also $7.25 an hour.)
At Cava, hourly employees are now eligible to contribute to the company’s 401(k) plan after one year. In addition, all employees will now receive at least six days a year of paid sick leave, four days of paid parental leave and one day to devote to community service.
“Higher wages are great, but they are just one of the pieces of the puzzle,” Schulman said.
He did not describe how the new measures would affect the company’s bottom line, but said they are “obviously an investment.” In addition to bumping up starting wages, he said many higher-earning employees also got a pay increase this month.
For Henry Hernandez, a supervisor at Cava’s newest store in Dupont Circle, a raise in hourly pay to $14.25 from $12 meant he could quit his second job at Chipotle. Before the raise, he said he often left home in Lanham, Md., around 6 a.m. and didn’t return until well past midnight. Now he works about 40 hours a week at Cava and, for the first time, has a job that offers paid sick leave.
“Before, I was working all the time,” said Hernandez, 33, who started as a line server at Cava three years ago. “Now I can spend more time with my wife and daughter. My life is much better.”
Cava executives spent seven months analyzing finances and cutting costs to figure out what they could afford, Schulman said. The company also offers free uniforms to employees, as well as free meals each shift. Other benefits include pet insurance and stock options for general managers.
“It took us a few years to really understand our operating economics,” Schulman said. “We’ve matured to a point where we have a good handle on what we can afford and what we can’t afford.”
As the company has grown, executives have been able to buy more items in bulk, which has helped drive down the cost of food, as well as disposable materials such as napkins, plastic forks and take-out containers, Schulman said.
Putting that money toward wages helps attract new workers and retain existing ones, which means less turnover in an industry where nearly three-fourths of workers are likely to leave within a year, Schulman said.
“Each time one person leaves, that means we have to spend time hiring someone else,” Schulman said. “That creates more training expenses, leads to inconsistent service and food our stores, which translates to potentially, over time, losing customers. We believe stable teams create stable stores.”
Economists say companies that pay higher wages than their competitors are likely to see immediate rewards.
“By paying more than the going rate, companies are able to attract higher quality job applicants, and their workers are likely to be more motivated to stay with them long term,” said James Sherk, a research fellow in labor economics at the Heritage Foundation, a conservative think tank in Washington.
“But,” he added, “it’s one thing to say there’s a benefit to paying higher wages. It’s another to say that if everyone pays higher wages, every firm will get those benefits. It doesn’t work that way.”
Even so, advocacy groups say higher wages for hourly workers are important, particularly in the Washington area, where the cost of living is among the highest in the country. For a single person in the District to make ends meet, they need to make at least $20 an hour working full-time, according to data from the Economic Policy Institute, a liberal think tank. For a single worker with a child, that figure is $37 an hour.
“Income inequality has reached historic levels, which is why we’re seeing not just restaurants like Cava, but also dozens of cities and states move to increase wages,” said Laura Huizar, a staff attorney for the National Employment Law Project. “Workers are definitely suffering now. Many are working long hours and still can’t make ends meet.”
Cava, which got its start in an old storefront in Rockville in 2006, now has 16 restaurants, with plans to open eight more by year’s end. Annual revenue — in the tens of millions — doubled last year and is likely to do the same this year, Schulman said.
Schulman said he and other executives will continue to look for ways to increase employee pay and benefits.
“Does this solve all their problems? No,” he said. “Is it going to alleviate all of their financial stress? Probably not. But it’s a step in the right direction.”
The current per-hour starting wage for Cava, up from $10.50.