Free Lunch

Well, not much of a surprise…

Caffe Nero will no longer provide its staff with a free lunch while on shift following the introduction of the new National Living Wage. 

Employees at the coffee chain were told in a letter that the perk would end on 11 April following the introduction of the new minimum wage for over 25s of £7.20 per hour.

The company said the change in wages, which came into force on 1 April, will have a “significant financial impact of the business”  and they are therefore looking into new ways to cut down on costs. 

The thing with employee perks is that they’re mutually beneficial. You can give people a sandwich which costs you x pence, but which the employee values at a higher value (which can be called y). And you give them that instead of z pence, which is somewhere between x and y. There’s also some hard to calculate but useful things, like you can get product feedback from staff, and in the case of cafes, they stay on the premises.

Or, let’s put in some made up numbers…

Let’s imagine the current remuneration is:-
Wage: £6.50
Lunch Cost: 70p

But the employee sees it as:-
Wage: £6.50
Lunch Value: £1

If the government forces Nero to raise the wage to £7.20, and they want to keep their costs down to avoid raising prices, their only option is to replace the “lunch” with wage. You’ve removed their flexibility to replace a cash benefit with something else.