Other Fast Food Restaurants Paying Beyond the Minimum Wage

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Last year, I wrote a post about Dick’s Drive In, a Seattle-based burger joint that pays its employees well above the federal minimum wage and provides a variety of benefits, including health care and a 401(k) with employer match.

The Times has a story up about other fast food restaurant chains that pay above the minimum wage including:

Boloco burrito restaurant (22 locations): $9/hr.
In-N-Out Burger (290 locations): $10.50/hr.
Shake Shack (34 locations): $9.50/hr.
Moo Cluck Moo (2 locations in Michigan): $15/hr.

Boloco co-founder John Pepper says a truly successful business is one that can pay its employees a good wage:

“If we really wanted our people to care about our culture and care about our customers, we had to show that we cared about them,” Mr. Pepper said. “If we’re talking about building a business that’s successful, but our employees can’t go home and pay their bills, to me that success is a farce.”

It probably helps that these chains are privately owned with no board of investors to report to.

Photo: Chelsea Nesvig

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9 Comments / Post A Comment

Lily Rowan (#70)

I was going to say something about Boloco and how the minimum wage in MA is about to go up to $11/hour, but then I read the details, and it doesn’t even get to $10/hour for another year and a half. Oy.

ATF (#4,229)

Mmmmmmmmmmm. Boloco. I ate there twice last week and I regret nothing.

garysixpack (#4,263)

“It probably helps that these chains are privately owned with no board of investors to report to.”

Most fast food restaurants are owned by franchisees, so they are also privately owned with no board of investors to report to. I would guess that fast food pays minimum wage because it can, and employees work at fast food restaurants for minimum wage because they have no other alternative. Melian Dialogue anyone?

Mike Dang (#2)

@garysixpack True of franchises, but unlike truly privately owned restaurants these privately owned franchises must pay a percentage of their sales to the corporation—money that could otherwise go to other things like payroll.

garysixpack (#4,263)

@Mike Dang
Sure. But it was still wrong to cast blame on stock markets and investors. And you need to bear in mind most of these owners of fast food restaurants would probably not be in the restaurant business if not for the franchise.

Mike Dang (#2)

@garysixpack “It probably helps.” I don’t think it’s naive to believe that investors are more focused on profits than whether or not employees can go home and pay their bills as Pepper openly points out. The question is then, if a fast food chain like In-N-Out Burger can sell $2.20 cheeseburgers and pay their employees a starting hourly rate of $10.50 an hour, why isn’t this viable for other fast food restaurants?

garysixpack (#4,263)

@Mike Dang
“The question is then, if a fast food chain like In-N-Out Burger can sell $2.20 cheeseburgers and pay their employees a starting hourly rate of $10.50 an hour, why isn’t this viable for other fast food restaurants?”

I’ve wondered about this myself. Here are my guesses why:

1) In-n-out is not franchised, so there’s one fewer level of profit-making. Of course, that means there’s a limit on how fast In-n-out can grow.

2) In-n-out has a limited menu, and that means simpler/less inventory, fewer equipment, better scale, easier training, etc. All of this translates into lower cost.

3) In-n-out does not rely on coupons, meal discounts, and other gimmicks that cut down on the price of a meal.

4) In-n-out spends less money on advertising. Just guessing here, since I do not watch commercial TV or web advertising.

Why don’t other fast food brands do the same thing? Some do, for example Habit, Smash Burger, 5-Guys, etc. Why doesn’t McDonald’s? Because McD chose a different business model years ago.

NoName (#3,509)

@garysixpack I think your guesses are correct. In-N-Out tightly controls their growth as a quality-assurance measure. Ironic that McD chose a different model, because if I recall correctly, McD invented this business model.

The level of life is very low. Earlier people went to good restaurants when today they have money only for fast food restaurants. People live with minimum wage and you know it’s very difficult. I prefer to eat at home or at good restaurants. May be it’s expensive but it is much better than eating fast food. When I don’t have money and my wage is not soon I turn to this online service. It’s fast easy in use.

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