Benefits Strategy

What is an Employee Food Allowance Stipend (with examples) & How to Offer One

Written by Kate

Showing employees you care about their well-being is a great way to increase positive spirit and employee loyalty. A great way to show your care for their well-being is by caring about your employees’ dietary wellbeing. This makes employees feel valued and appreciated. The challenge is that people may have differing dietary restrictions (personal, or religious). This is where food allowance stipends (part of a broader fringe benefits strategy) come in, so that you can cater to every employees’ needs & personalize their experience. 

If you’d like to know more about this topic, then read this right to the end. Click on the sections below to jump right to a specific question.

What is an Employee Food Allowance Stipend?

Employee food allowance (also known as meal stipends, meal allowance, or employee meal benefit) is an amount of cash (or similar) that the company gives to their employees to purchase food. Employee food allowances are usually part of a broader employee stipend, or even fringe benefit strategy. Many employers also tack on these popular types of stipends and reimbursements:

Some insurance companies offer their own wellness reimbursement program as well, such as the Cigna gym reimbursement program, humana wellness program, or the Go365 program by Humana.

Initially, on-site lunches as fringe benefits were much more common in the corporate space. However, with the advent of competitive employee benefits, many companies started giving their employees food allowances. 

Food allowances are better than the traditional lunch provisions due to the fact that employees can now make the choices themselves. This power of choice makes it a great way to attract the best employees to your company. Giving them the power of choice makes them feel empowered and can increase productivity.

However, it is essential to know the difference between food stipends and per diem. Per diem is a term used to refer to the daily allowance employers give to employees whenever they travel on official assignments. This allowance would cover their feeding, accommodation, and any other expenses incurred on the official trip. Food stipends are usually given daily, weekly or monthly, regardless of the employee traveling or not.

What is the Average Food Allowance Stipend Amount?

From our experience with various clients, the typical amount given as food stipends would range from $10 – $20 daily. The amount a company could afford would largely depend on its budget for the benefit. You can also explore your creative juices with this benefit. Some companies would offer the food allowance in conjunction with other related benefits packages.

What does a Meal Allowance Cover?

This stipend covers any type of food the employee might want. Due to the variety of choice, employees use the stipend on any meal of their picking. However, the most common options include the following:

  • Snacks.
  • Groceries
  • Smoothies
  • Freshly prepared food
  • Takeout
  • Juices
  • Coffee, tea, and other beverages.
  • Some could also use it to cover essential meals like breakfast or even dinner.

When Should You Offer Food Allowance Stipends?

In today’s corporate world, offering food allowance stipends should be something every company should offer (if they can afford it). However, some scenarios might make it necessary:

  • Transitioning from on-Site lunches

If you formerly offered on-site lunches for employees and you’re trying to fold it up, transforming the benefit into a meal allowance might be the way to go. Food allowances are much more cost-effective and do not require any logistic planning.

  • Companies with various branches

For large companies, giving food allowances is much easier than offering lunches. Also, the preferences of the workforce across various branches would differ, so meal allowances put the choices in their hands.

  • Companies with remote workers

The pandemic taught many businesses to adapt to the idea of having staff working from home. However, if you’re just transitioning into the remote employment sector or you plan to convert some employees to remote workers, a food allowance stipend is a good employee benefit to add to their packages.

Benefits of Employee Food Allowance Stipends

If you’re still a little bit unsure as to why you need to provide food allowance to your employees, this section should help make the case. Below are some reasons why employee food stipends are beneficial to companies:

  1. Helps Attract and Retain Top Talents

Hiring & retaining top talent at your company will help skyrocket productivity, and improve your future hiring capabilities as well. One of the easiest ways companies ‘seduce’ potential employees is through benefits. By providing benefits like food allowance stipends, it sends a message that employees are cared for in your organization. This could be a major deciding factor in helping to hire top talent, or retaining your existing talent.

  1. Cost-Effective

If you want to offer your employees provision for food while putting expenses at bay, food allowance stipends are the way to go. Previously, on-site lunches used to be very common. However, they are much more stressful as you have to deal with the food getting to the office on time, and the hassles of cleanup afterwards.

However, with food benefits, you can easily provide food benefits for your employees without breaking the bank, or spending time/effort doing cleanup.

  1. Increases Positive Spirit and Productivity Levels

A well-fed employee is a happy employee, and a happy employee is more productive. Providing food allowances for employees eliminates the worry of budgeting for one meal of the day. This serves as a relief and keeps their spirits high at work. By helping them to refuel with their preferences, you make them happier. A positive spirit in the workplace would promote productivity and wellness.

  1. Caters for Everyone

Most employees have various diet preferences, allergies, and restrictions. So, feeding everyone the same thing could be unfeasible for some people. However, with food allowance stipends, you can include everyone in the company’s meal plan.

Are Food Allowance Stipends Taxable?

Yes, they are. In the United States, you must report any stipends you give for meals to the IRS. However, how you pay the taxes on these stipends could be divided into two categories. First, you could decide to add taxes on top of the money given to the employees, so they report taxes themselves (known as grossing up). You can also take care of the tax reporting, and handling yourself. Either way, you will have to pay payroll taxes applicable to food allowance stipends.

Examples of Leading Companies that Offer Meal Stipends

If you’re trying to draw inspiration from other companies that offer meal stipends, we’ve compiled a list of some popular companies that provide this popular company perk below.

  1. Snapchat

Snapchat offers a meal stipend of $16/day to its employees.

  1. Webflow

Webflow does not have a separate meal stipend. However, they offer a $380/month remote work stipend to remote workers, covering food and any home tech they need.

  1. SAP

Depending on your position at SAP, they offer employees catered meals or meal stipends.

  1. Lose It!

Lose It! offers their provide free meals for their employees on some days of the week

Things to Consider When Setting up a Food Allowance Stipend Program at Your Company

There are a few intricacies that go into setting up a meal stipend. To set up food allowances for your company, various factors must be considered. We’ve highlighted some of them below:

  1. Budget

Your budget for the allowance is the first place to start from. You need to evaluate how much you can spare for the allowance. Then, you should estimate the prices of food, snacks, or groceries around the area, depending on what the allowance is really meant for. You don’t always have to start big; it’s the effort that matters at the start.

  1. The Frequency of Payment

After determining the budget and a fair stipend for each person, the frequency of food allowance is up next. Do you plan to pay daily, weekly, or monthly? This is where the function of the allowance comes in again. A daily or weekly payment is advisable if you’re allocating the allowance to lunch or snack breaks. However, if it’s intended for remote workers or groceries allowance, monthly payments might be a better choice.

  1. Benefits Management 

Various benefits management systems could help manage food allowance payments. You could do it manually, where you’d have to track every employee’s food allowance records. Tools like Google Sheets or Microsoft Excel are essential resources in this management system.

Alternatively, you could use benefits management systems that help track your employees’ food allowance stipends balances and communicate them to them.

How to Set Up an Employee Food Allowance at Your Company

Despite the freedom afforded to employees with the food allowance stipend, it is possible to set it up to be much more orderly than you’d think. To do this, follow the steps below:

  1. Work Out the Details

Before you can roll out the new food allowance benefits, you need to know how much is available for the benefit, the frequency of payments, and the amount for each person. You should also map out the allowance for each employee and set up software to help manage funds disbursement (or reimbursements).

  1. Set a Date for the Implementation

You should pick a date to roll out the food allowance benefits. Having a specified date would help put a deadline on all preparations and ensure all required information is in place before the time comes.

  1. Inform your Employees Beforehand

Before the launch date reaches, send out a broadcast to all employees, giving them information about the new allowance. The broadcast should also tell them how the food allowance management system works, how much is allowable for each person, and the payment frequency.

If you would like to learn more about fringe benefits, check out this guide on the different types of fringe benefits you can offer.

Instead of going through all the stress of setting up the food allowance stipends yourself, you work with the experienced team at IncentFit. We provide one-on-one support while handling all the details involved in setting up your program. Feel free to schedule an introductory call with us at Incentfit, at a time that works best for you.

Corporate Wellness Benefit Managers having a discussion while looking at an electronic tablet.

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