2025 Compensation Trends in Private and PE-Backed Restaurant Companies: Executive Pay in a Value-Creation Era
As 2025 continues, the private and private equity-backed segment is undergoing a transformation in how it approaches executive compensation. Unlike public companies constrained by proxy disclosures and public market expectations, private restaurant brands enjoy more flexibility, but face even greater pressure to tie pay to performance, retention, and enterprise value growth.
From emerging regional concepts to national PE-backed platforms, restaurant organizations are redesigning how they pay C-suite and VP-level leaders. The goal: build high-impact teams that can scale operations, improve unit economics, and ultimately deliver a lucrative exit.
We’ll look at the evolving compensation structures across the private restaurant landscape, drawing distinctions between C-level and VP-level roles, and between founder-led and PE-owned environments.
2025 Compensation Context: Growth Amid Pressure
Private restaurant companies, whether owned by founders, family offices, or PE sponsors, are balancing aggressive growth targets with persistent margin pressure. Several forces are shaping compensation design:
Sticky food and labor inflation is forcing operational discipline and margin accountability.
Exit timelines are compressing, particularly for PE-backed brands aiming for returns in 3–5 years.
AI and tech investments are accelerating, creating demand for digitally fluent leaders.
Leadership turnover risk has risen sharply, especially among VP ranks, as talent is poached by competitors and aggregators.
These pressures make executive alignment and retention more critical than ever leading to structural changes in pay across the leadership hierarchy.
C-Level Compensation: Equity-Rich, Exit-Focused, and Sponsor-Aligned
Base Salary + Bonus
Base salaries for CEOs, CFOs, and COOs range from $300K to $500K, typically higher in sponsor-backed businesses.
Annual bonuses are usually 50–100% of base, driven by:
EBITDA growth
Unit openings / franchising goals
Margin improvement and cost controls
Strategic milestones (e.g., AI integration, brand expansion)
Founder-led companies tend to offer lower base salaries and lean more heavily on long-term upside, while PE-backed companies standardize comp against portfolio peers.
Equity & Value Creation Incentives
C-suite equity participation is a cornerstone of compensation, especially in PE-backed brands.
Typical ownership or incentive equity:
5–10% of fully diluted equity for the CEO (in a shared management pool)
1–3% for other C-level leaders (CFO, COO, CMO, CHRO)
Equity vehicles include:
Profits interests
Incentive stock options or phantom equity
Carried interest-style structures, with payout contingent on exceeding a preferred return (e.g., 2x MOIC)
Vesting Models
Vesting is increasingly hybrid:
50% time-based (over 3–5 years)
50% performance-based (e.g., hitting EBITDA, revenue, or exit thresholds)
Many plans include acceleration clauses on change of control (sale, recap, IPO)
VP-Level Compensation: Retention-Focused, Operationally Tied
VPs are the operational backbone of private restaurant brands, leading the functions that deliver day-to-day performance. Compensation at this level is increasingly customized to reflect impact, tenure risk, and competitive pressure.
Base Salary + Bonus
Base salaries typically range from $200K–$350K, with digital, ops, and franchising roles commanding a premium.
Annual bonus targets range from 25% to 50% of base, driven by:
Comp sales and EBITDA
Labor efficiency and turnover
Technology adoption and marketing ROI
PE-backed companies often include “performance gates” (e.g., minimum EBITDA before bonus eligibility)
Equity Participation
Equity is less common, and when offered, significantly smaller than C-suite stakes.
Common formats:
Phantom equity or Stock Appreciation Rights
Deferred bonus pools tied to an exit event
Retention-based RSUs with cliff vesting at year 3
Typical equity exposure is 0.1% – 1.0%, though this increases slightly in earlier-stage companies.
Emerging Compensation Trends
Exit-Aligned Incentives at the C-Level
Equity grants now frequently vest based on hitting specific value creation hurdles (e.g., 2x–3x return on equity) to ensure CEO and PE sponsor alignment.
Phantom Equity and Deferred Bonuses for VPs
To avoid dilution and preserve cap table flexibility, many companies grant VPs synthetic equity that mirrors true equity value at exit, but without governance rights.
Retention Bonuses for High-Churn Roles
For VP roles with high turnover (Ops, HR), companies are using deferred cash bonuses (e.g., $100K payable after 24 months) to retain executional leadership through exit.
Role-Based Pay Differentiation
VPs in digital, franchising, or supply chain roles now often receive premium pay or separate LTIP eligibility, reflecting their outsize impact on value creation and scalability.
Portable Equity in Event of Exit
C-level leaders are negotiating equity rollover rights post-transaction, allowing them to participate in upside during a second investment cycle under a new owner.
Strategic Implications for Owners and Operators
Private restaurant leaders, especially those backed by PE, must strike a balance between motivating talent and preserving value for investors. Compensation programs in 2025 increasingly reflect:
Alignment with exit strategy
Talent retention over 3–5 year windows
Differentiated rewards for high-ROI functional leaders
Strategic use of equity without over-dilution
Companies that proactively tailor comp plans to their growth stage, capital structure, and leadership depth will be best positioned to scale and attract institutional capital, or exit successfully.
Conclusion: Compensation as a Growth Engine
In 2025, private and PE-backed restaurant companies are no longer treating compensation as an HR function, it’s a lever of strategic value creation. The C-suite is being structured to maximize equity outcomes at exit, while VP-level leaders are incentivized to deliver operational excellence over time.
As M&A heats up and the capital landscape evolves, companies that design thoughtful, aligned compensation frameworks will stand apart, not just in how they pay their leaders, but in the enterprise value they build.
