Shake Shack, a burger chain with locations in Florida, New Jersey, New York, Pennsylvania, Washington, D.C. as well as international locations in the Middle East, Russia, Turkey, and the United Kingdom, pays starting workers $9.50 an hour outside of New York City and $10 an hour for New Yorkers, CEO Randy Garutti told ThinkProgress. It also offers full-time employees health, dental, vision, retirement, and disability benefits plus paid time off.
But on average, workers get $10.70 an hour thanks to a program it calls Shack Bucks. Every month, it gives employees a percentage of the company’s top-line sales. “It’s sort of immediate revenue sharing, not a long-term program,” he noted.
The company pays about 70 percent of employees’ health care premiums and also matches contributions to their 401(k)s. He added that he is “more excited” than all of these perks about how many employees move up into manager roles. “There are a lot of people who started making $9 an hour and are now general managers in our restaurants making very good money,” he said. The owners started in fine dining and brought the compensation practices from those restaurants into its original burger and hot dog stand.
When asked if these practices have come with concrete benefits for the company itself, he responded, “Absolutely,” adding, “Our turnover is lower, we can hire the best, they stay longer, and we can grow them into management.” And it pays off for customers. “If the team feels taken care of, then they’ll go out and take care of the guests.”
And he thinks other business owners in the fast food industry can take this approach and see similar results. “I know they can,” he said. “Because I just know that it works.”
And Shake Shack isn’t the only eatery taking this approach to its workforce. Michigan’s Moo Cluck Moo pays entry-level workers $15 an hour, a move its owners say leads to less turnover, better customer service, and more skilled employees. In-N-Out, a West Coast burger chain, pays $10.50 an hour for entry-level employees. Outside of the burger world, Boston-based burrito chain Boloco pays starting workers anywhere from $9 to $11 an hour, which the owner says increases loyalty and productivity and, in turn, profitability.
In light of the conversation to raise the minimum wage, others have decided to join in. Two pizza companies in St. Louis will soon pay at least $10.10 an hour. It has also spread outside of the food industry: clothing retailer The Gap recently announced it will also raise its lowest wage to $10.
But the fast food industry is notorious for low pay, where workers make so little that they consume $243 billion in public benefits each year just to get by. And while some executives argue that these jobs are just a starting place for teens earning extra cash, the reality is that the majority of workers are well out of their teenage years. Meanwhile, the average low-wage worker brings in half his or her family’s income, while more than a third of fast food workers are supporting children.