What Are Subsidized Meals at Work?

What Are Subsidized Meals at Work?

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One of the many perks that some companies can offer their employees, and sometimes their guests, is subsidized meals. Yet, what are subsidized meals, and what kind of benefits do employers get from offering them at work?

Subsidized meals at work are meals for employees during their shifts that are employer-provided and either fully or partially covered by the state. While some conditions apply, this incentive is budget-driven and results in fewer costs overall to both the company and the employees. 

Continue reading below to find out more facts about subsidized meals and how they benefit those using them. This post also explains what to look out for if you are an employer considering offering this perk. 

In addition, subsidized meals can be very cost-effective. Depending on employee wages, you can actually save your company money by paying for their employees’ refreshments, as this provides employees time to work that they would’ve otherwise lost going to a coffee shop.  

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Does the Company Pay for the Entire Cost of the Meals?

The company does pay for the entire cost of the meals if the employer chooses full subsidization. The cost of subsidized meals can vary depending on the choice the employer makes in a meal plan.

There are generally three types of subsidized meals:

  • Full subsidization: The company takes on the entire cost of the employee’s meal. Full subsidization can be through a food service that is provided in a company cafeteria. Most companies use an outside catering company to either provide food prepared off-site or to cook the food directly in the cafeteria. 
  • Partial subsidization: The company takes on part of the food cost, allowing the employees to purchase their meals at a discounted rate. This could also mean that the employee pays full price for the meal but has free beverages.
  • Zero subsidization: The company pays zero amount toward the employee’s meal. These companies may still supply a cafeteria or catering service just but at no discount for the employee. A free beverage option may still be available with this one as well. Most companies opt for a coffee station and water either in a cooler or bottled. 

Conditions For an Employer Offering Subsidized Meals

Unfortunately, not all companies are able to offer this perk to their employees. Some conditions must be met to add subsidized meals to your benefits list. Below are just a few. Be sure to check what your local area specifies as well. 

  • Food subsidies are only offered with specific food options such as in-house canteen, restaurant checks, or catering options to the office, to name the three most popular. 
  • Employees must be served the meal directly before, after, or during their shift. 
  • The location of the subsidized meals must be on or near the employer’s place of business. 

Along with these conditions, the employer must keep detailed records of the meals served to the employees. All receipts must be kept for meals that are subsidized from a visit to a restaurant.  

Why Do Many Companies Subsidize Meals for Their Workers?

Many companies subsidize meals for their workers for the numerous benefits they receive by offering them. For instance, subsidized meals, even low-cost ones, increase participation rates and help to boost productivity, in general.

In fact, according to a 2015 Peapod survey of 1,000 full-time office workers, 67% of employees who are given free meals during their shift are said to be very happy with their current job. 

More and more companies are beginning to subsidize meals as one of the perks for employees. Here are just some of the reasons why: 

  • Subsidized meals are a great retention tool and more affordable than you think.  
  • Subsidized meals can help create a community atmosphere and bonds between employees.
  • Subsidized meals help increase productivity –whether at a desk or on a warehouse floor. 
  • Subsidized meals can boost the moods of employees and help them to stay more focused. 
  • Subsidized meals provide everyone with a healthy meal, thus benefiting every employee.

Do Workers Order More Expensive Meals When the Company Is Paying For Them?

Subsidized meals mean that the employee is either comped a meal or given a substantial discount on one. And while you might think that this would result in employees ordering more expensive meals, you’d be wrong. 

Workers do not order more expensive meals when the company is paying for them. Generally, employees tend not to spend more because it is subsidized, and most will just enough to keep them sustained until their next break. 

Although, having subsidized meals can sometimes encourage employees to try new and different foods. Due to this, there may be times when they take just a bit more in order to try the new item. 


Subsidized meals are a great benefit to offer employees to keep them engaged, happier, and more productive throughout the day. These meals can benefit every employee and improve employee retention to keep your business running smoother. 

While these meals are a tax-free benefit, be sure to keep all receipts from restaurants, catering services, etc., because detailed record keeping is a must to claim the subsidy come tax time.