Dive Brief:
- Shake Shack will put more than $10 million toward its restaurant employees over the next 12 months in "a commitment to attracting and retaining the best restaurant talent," according to a press release.
- More than $9 million will be allocated for hourly wage increases for store employees, and roughly $1 million will be put toward hiring bonuses. The company also will invest in its leadership development programs.
- The pledge follows a $6 million investment in 2020 to increase wages, which included a year-end bonus of $250 to $400 depending on the position for hourly team members and a 10% premium pay increase provided from the end of April through the summer to frontline staff.
Dive Insight:
Shake Shack's investment in its team members suggests that even brands known for high wages and progressive employee benefits will need to shell out to overcome the industry's historic labor crisis. It boosted wages at over half of its locations last year and two-thirds of its locations this year. These pay bumps could be a savvy way to fight the labor shortage, as 69% of workers who have left the industry report that a livable wage would make them consider returning, per a One Fair Wage report.
The burger chain is already offering $1,000 hiring bonuses for managers and has extended its $500 hiring bonus for hourly restaurant workers hired between June 10 and August 31 in many locations, the company wrote. In addition, Shake Shack is giving managers a monthly subscription allowance for up to 12 month that can be put toward cell phone bills, entertainment or other services "that enrich their mental, physical, or emotional wellbeing."
Even before the pandemic, Shake Shack was finding ways to boost retention. In 2019, it began offering equity grants to general managers, who now have the ability to earn over $115,000 in total compensation. It has also been working to boost diversity, equity and inclusion across the company, aiming for gender parity and for people of color to make up half of its leadership by 2025.
These perks could both attract new workers and retain existing talent. Seventy-eight percent of respondents to a separate One Fair Wage study said stable living wages would convince them to stay at their jobs, while 49% said paid sick leave would be enough incentive to remain at work.
Rival fast casuals are also looking to sweeten their value proposition. Chipotle committed to raising pay to an average of $15 per hour by the end of June, resulting in starting wages for new employees ranging from $11 to $18 per hour.
But this labor pressure is spurring chains that haven't historically been on the cutting edge of benefits and pay to make changes to their policy, too, as employee shortages are the second top concern for restaurant operators after rising food costs, according to a June report from Quadrant Strategies.
McDonald's, for example, is making a multimillion-dollar investment to help franchisees roll out hourly wage hikes, paid time off and tuition coverage, as well as child and elderly care benefits this summer. This move comes after McDonald's corporate announced it would bolster wages at company-owned restaurants to between $11 and $17 an hour to better compete with industry rivals.
