Meal Allowances: What You Need to Know

Fuel your people to do their best work. A meal allowance, also called a food allowance, meal stipend or employee meal benefit, is a perk that all of your employees can appreciate wherever they are.

Meal allowances, also known as food stipends, are a relatively old concept. Depending on a person's functional role within an organization, companies would give their people meal stipends to use when on travel and / or taking out customers or prospective clients.

Fast forward today, the idea of a meal stipend has transformed quite a bit. Meal stipends are gaining traction as an idea because organizations that once catered in-office lunch or snacks for their people are now realizing that these in-office food options are limiting. They are now implementing more inclusive ways to support their employees' food needs and give them the choice.

We developed this guide to give you everything you need to know about meal stipends.

Here's what is covered in this guide:

  1. What is a meal stipend?
  2. Examples of meal stipends
  3. What people spend their food stipends on
  4. Benefits of food stipends
  5. Finding the budget
  6. How to create one for your organization

What is a meal stipend?

First, a definition:

A meal stipend is a sum of money given to employees for them to use to purchase food.

They're also referred to as meal allowances or food stipends. 

The stipend funds can be used for meals like lunch or dinner, or items like snacks, groceries, and beverages that will make their working experience more convenient, healthy, productive, and supported. Some even call them a grocery allowance because they're so flexible for your employee's food needs. With these benefits, it's easy to see why meal stipends are the most desirable employee meal benefit.

The data on who offers meal allowances

According to a 2019 Talent Market Report, both small and large companies are likely to offer meal allowances with small companies offering them 17% and large companies 37% of the time when they're unable to match a candidate's desired salary. That has likely changed significantly in recent months, with COVID-19 making in-office food options a no-go for companies all over.

The graphic from their report below is below, highlights their research.

Other alternative incentives include customized benefits, profit sharing, cell phone reimbursement, customized training and development, remote work flexibility, increased vacation, better job title, and more.

Examples of Meal Allowances

Below are a few examples of top companies supporting their people with food stipends:

1. MasterClass

MasterClass offers their employees $120/month as an interim snack stipend (due to COVID).

2. Snapchat

Snapchat gives its people $16/day for food.

3. SAP

Depending on the office, SAP would provide in-house catered meals or a food stipend.

4. Webflow

Webflow has not set a meal-only stipend, but they do have a "Remote Work Stipend" which includes the option to buy food, tech, and productivity-related items.

5. Lose It!

Lose It! gives their employees $100 to spend on lunch delivery.

What do people spend their meal stipend on?

  • Breakfast, lunch, or dinner 
  • Snacks for their home office
  • Coffee, tea, and other beverages
  • Groceries 
  • Smoothies
  • Juices
  • Takeout or delivery
  • Healthy food kits such as Blue Apron and Purple Carrot
  • Healthy prepared food options such as Freshly

Benefits of food stipends

There are plenty benefits to offering your people a meal allowance, below we highlight the most common five.

1. Happier people and increased productivity

Your people will purchase the food they genuinely need to make their remote work life easier and more comfortable. When people can easily refuel in ways that satisfy their convenience, tastebuds and dietary needs, they're happier and more productive.

2. Attract & retain talent

Catered meals were a staple in many offices across the nation pre-COVID. However, how many companies have been able to continue this since COVID began? Not too many.

As this Protocol piece points out, people are mourning the loss of their free lunches and snacks. You can stand out against the crowd by adapting and offering a food stipend today so that your employees get support for their most basic life needs.

3. Equitable & inclusive

Today more than ever, people's diets are varied due to preferences, intolerances, and allergies. With a food stipend or grocery allowance you're able to create an employee lifestyle benefit that supports everyone, regardless of whether they're paleo, vegetarian, vegan, gluten-free, dairy-free, and more.

4. Cost-effective

If offering free lunches or meals to your people is a priority, this is one of the most cost-effective ways to do so.

Catered meals on-site are a thing of the past and it is also a time-consuming process to make sure the right amount of food is delivered, at the right time, while also ensuring people have the food they need (e.g. paleos, vegetarians, vegans), and the office space is cleaned up afterward.

Food allowances allow people to get the food they want while sticking to a budget, and without worrying about the time or costs of cleaning-up.

If you want to see why they're so cost-effective, see how much you could be saving by using Compt to manage your meal stipend.

5. Scalable

A food stipend is an easy and scalable way to set your people up with the food they want. Additionally, the right perk management software can also help ensure that taxes are accounted for, always.

perk stipends ebook

Learn more about the benefits of general perk stipends.

Download the free eBook to find out why perk stipends and lifestyle spending accounts have become the most common new perk.

How to set up a meal stipend:

There aren't a lot of steps to set-up a meal allowance. Below we break them down into two steps.

1. First determine how much you want to offer your people, within what timeframe.

Look to the examples above if you need inspiration, or use our Perk Vendor Cost Calculator which can help you identify the budget.

Keep in mind, you don't need to offer a lot of money to make a big difference.

2. Decide how you’ll manage the program.

The most common ways to manage a stipend program include:

Managing the process manually. 

If you choose this option, you'll need to set up a process to track employee food purchases, collect receipts, manage balances, process approval and paid-out food perks, as well as rejections or ones which need further review.

You might want to use Google forms to track submissions, excel or Google sheets to track progress, and create a process to track the nontaxable vs taxable (for IRS compliance). Yes, food perks are taxable!

Select an expense software to manage it.  

Expense software solutions like Expensify and Concur are largely meant for business expenses which these are not.

If using this option, make sure every employee has an account with your company's expense software option and that you've also set up a way to track the individual employee food budgets (this prevents overspending), and work with your finance team to identify and execute on the best plan for accounting for taxes.

Select a "perk software" to manage it.  

Options for perk stipend solutions have grown tremendously over the past few years as more people turn to inclusive and flexible options for their people.

This kind of software can be especially helpful if it communicates your food program details to your team members, tracks their spending balances, and spending. Perk solutions should streamline your admin by having important information at your employees' fingertips.

Keep in mind that food allowances are a taxable benefit.

Download our 'Perks Software Buying Guide' to find the right perks for you and your team

Whether it's selecting individual perks, vendor aggregators, discount platforms, debit cards, or stipends -- our goal is to help you select the best perks program for your needs.

How to find the budget for a meal stipend

At first glance, it might feel like you have to create a new budget for this, and while that might be the case, there are other options to find the budget.

Option 1: Create a new budget

If you've already decided this is an important endeavor for your company and its people, then you're set! 

If using a perk solution, be sure to count this cost into the budget. Or if you're managing them manually, you need to find a way to quantify this cost as well since the cost of time and labor to manage these is often a more hidden cost that will fall on HR.

Option 2: Transition existing food or snack budgets

Offering on-site catering for your people is a thing of the past. If that budget is still available, transition this money into a meal allowance.

Option 3: Transition existing perks 

According to a recent SHRM report, about one-third of companies plan to extend the option for remote work into the future (due to COVID).

It's highly unlikely that companies will have the same perks they had pre-pandemic post-pandemic. Regardless of your situation, if you're looking for a way to serve your people in unbelievably meaningful ways, transition the "old perk budget" into a meal allowance, or even a remote work stipend or general perk stipend.

Use our helpful calculator to determine the cost of your perk vendors, and how much you can save by switching to food stipends with Compt.

Other types of stipends

There are more stipends than just a meal allowance. 

Do a Google search for “top perks” and inside almost every list is a surprising number of perk stipends.

So what are the other types of stipends or allowances? Below is a list of a few more you can consider implementing.

Stipends or allowances make it possible for companies to offer more perks as lifestyle benefits with less money and while ensuring that they're personalized to meet the needs of their people. 

See how a meal stipend program can elevate your company

Let's connect to see how a meal allowance - or any other flexible perk stipend! - would work at your company and truly cater to all of your people's unique needs.

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