The Background: Fostering community is a team effort
Sexy Pizza, based in Denver, Colorado, is not your run-of-the-mill pizza joint. Founded in 2008 with a mission to combine high-quality food with community engagement, the multi-location restaurant is engaged in philanthropy and the arts, donating a percentage of proceeds to projects that support those with disabilities, survivors of abuse, and underprivileged youth. It’s also a fierce supporter of efforts to end local homelessness and its four locations are gathering spots for artists and entrepreneurs wanting to collaborate on community initiatives.
Sexy Pizza owners Kyle Peters and Kayvan Khalatbari knew that these community-building efforts began with their team. Because just 18% of restaurant employers offer a 401(k) plan, the pair wanted to buck this trend and provide a robust benefits package to their employees, including fully compensated health, dental, and vision insurance, free mental health services, PTO, home purchase assistance, and a 401(k) retirement plan with an employer match. Sexy Pizza is also an employee owned company, with stock being distributed to employees on an annual basis.
The problem: Restaurants face challenges attracting and retaining dedicated staff
Having worked his entire career in the restaurant business, Peters had never been offered a 401(k) before—a common problem faced by both restaurant owners and their employees. "Restaurant employees don’t often get these opportunities,” he said. “Many restaurants don’t feel they have the profits to contribute to a match. But to attract knowledgeable, dedicated staff that will help grow the business, we need to be able to offer these important benefits."
To add fuel to the fire, many legacy retirement plan providers haven’t catered to the unique needs of small businesses. For example, traditional 401(k) plans may have been cost prohibitive for restaurants to provide their staff in the past.
I would love to change the restaurant industry by showcasing what other employers can be doing.
Kyle Peters, owner at Sexy Pizza
The solution: A straightforward 401(k) anchoring a robust benefits package
Sexy Pizza found a partner in Human Interest. After researching his options, Peters was drawn to the affordable, flexible plans designed for small businesses. Since rolling out a 401(k) plan in June 2018, Sexy Pizza has seen nearly one-quarter of its 100 employees participate, an impressive feat considering that the average participation rate for food service workers is just 13%, according to the Bureau of Labor Statistics. Peters attributes this success to a combination of several key factors:
-Taking an intentional approach to 401(k) plan design so that it encourages participation, such as offering a 4% safe harbor match to all employees
-Access to readily available educational resources and specialists from Human Interest (for example, live and on-demand enrollment presentations)
-Sparking dialogue among employees to reinforce the opportunity of saving for retirement early
Spark the retirement conversation with first-time savers
While a 401(k) helped Peters diversify his own retirement strategy, adding a plan was, more importantly, central to his belief that his employees deserve a more secure future. That’s why Sexy Pizza offers a plan to employees over the age of 18 (after two months of service)—many of whom, like Peters, are saving for retirement for the first time. “[In the restaurant industry] most employees are early in their careers,” he said. “Financial education isn’t there. The mindset is not there.” Peters acknowledges the impact that peer influence can have on first-time savers. “It’s one thing to have someone older than you tell you it’s important to save for retirement,” he said. “When someone who understands it a bit more talks about it themselves, we see a lot more employees signing up.”
Keeping it simple—for both employees and admins
Peters also recognized the advantages that Human Interest provides to his business. As important as it was to offer easy-to-use retirement benefits to his employees, it was essential to keep things simple and streamlined from an administrative lens, so Peters could focus on growing the business. For example, choosing a safe harbor 401(k) plan meant less work and less worry for Peters. Besides providing employees a valuable match, safe harbor helps keep Sexy Pizza in compliance with the IRS, as most testing requirements are automatically satisfied.
Employee benefits have the potential to drive business growth
With the help of Human Interest, Sexy Pizza believes employee benefits can help improve customer service and profitability. According to Peters, some of the business’ best marketing is actually around these benefits, which can attract customers who resonate with the brand mission.
As a growing employee-owned restaurant group, Sexy Pizza has also witnessed how a 401(k) plan can build morale and reduce turnover, critical factors when expanding to new locations. “When we attract individuals who want a longer career path, that helps us build a more knowledgeable and dedicated team,” he said. Just as they serve as a beacon for community engagement, Sexy Pizza takes its responsibilities as a retirement benefits trendsetter seriously. “I would love to change the restaurant industry by showcasing what other employers can be doing,” said Peters.
This is a current client of Human Interest who was not compensated for contributing to this article. Read our full disclosures here.