Phoenix catering firm M Culinary switches to employee stock ownership plan
Employee retention is tough, especially in the hospitality industry, which is why the Valley’s largest catering firm has decided to change its whole ownership structure.
M Culinary Concepts, which saw $14.12 million in gross sales for its catering business in 2023, announced this month that it is now 100% employee owned after switching to an employee stock ownership plan.
Employee stock ownership plans, or ESOPs, are pretty rare across businesses in general, and they are not common at all in the hospitality industry, which is one of the reasons the company’s founders wanted to make the switch. The move is meant to help foster and maintain talent at the catering firm.
“It does set us apart to be more attractive for new employees as well as increases our retention,” said Brandon Maxwell, who co-founded M Culinary with Michael DeMaria in 1999.
With the implementation of the new ownership structure, all full-time M Culinary Concepts employees are eligible to participate in the ESOP plan. For each employee, contributions will be made to their ESOP account based on their compensation. Over time, each employee’s account will be allocated more shares and increase in value. Upon retirement or end of employment, employees have the opportunity to monetize their account.
The ESOP is entirely funded out of the company’s future cash flows. Not only do each employee’s stock options increase in value the longer they work for the company, but the plan incentivizes employees to work in a way to make the company more profitable.
“The employees will know a lot more about the financial success of the business than they ever have before,” Maxwell said. “We didn’t hide those results from them before, but there was no reason to share them when we had four business partners that owned the business.”
Company looking to add to its workforce
M Culinary currently has around 185 full-time employees. The firm caters at some of the biggest events at the Valley, including the WM Phoenix Open. It is booked for several events around the NCAA’s Men’s Final Four, which will be played in Glendale in April.
M Culinary also has several part-time and seasonal employees. Those are not eligible for the ESOP, Maxwell said, but he added that many of M Culinary’s full-time employees started as part-time or seasonal workers.
“There’s a long term play here for us — join the company now when you get on the ground floor of an ESOP,” Maxwell said.
While it is meant to keep employees around for the long term, Maxwell said, M Culinary is also hoping it will encourage some people to apply right away. Right now is usually one of the busiest times of year for M Culinary, but he said the company has even more going on with the Final Four coming to town.
“We’re hiring every day here — new employees — and we’re just trying to stay ahead of it at this point,” Maxwell said. “March with spring training and the Final Four coming up and all the people in town, this is the season right now for us. We’re remarkably busy.”
A handful of other businesses in the Valley have ESOPs, including marketing firm Lavidge and Sundt Construction, which has had an ESOP since the 1980s.