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‘Gotta invest in our people:’ Shake Shack tests 4-day workweek for managers to help retain talent

NEW YORK — As competition for labor heats up, Shake Shack officials hope some creative perks and benefits will attract workers — and convince them to stay. Among them: stock options and four-day workweeks.

“We’ve gotta invest in our people. We need to pay people well. We need to give our general managers stock every year so they’re owners of this company,” Shake Shack CEO Randy Garutti told CNN’s Poppy Harlow in a recent Boss Files interview.

The company has also been testing out four-day workweeks for its managers. Today, about 30% of the company’s 187 U.S. locations are trying out the schedule.

Among other things, a four-day workweek helps parents save money on childcare, explained Garutti. He said he’s still deciding whether to expand the test to the remaining stores.

“There’s so much to figure out about this. We’re not ready to launch it, and who knows where it’ll go,” Garutti said. But the goal is “not just retention, but more applications.” So far, 63% of Shake Shack’s job candidates pointed to the shorter workweek as the driving reason they applied, according to the company.

Unemployment in the U.S. is historically low, and competition for workers is fierce. In the fast-food and fast-casual industry, where hourly wages are low and turnover is high, employers are chasing workers with hiring parties, AARP partnerships, and mental health benefits. Shake Shack, for its part, offers medical, dental, and vision insurance, as well as short-term disability, to every employee who has been working for the company for at least 90 days.

While most of Shake Shack’s employees are paid by the hour, many of the company’s other benefits are reserved for salaried employees, like managers, who get stock options and family leave, among other things, and Shake Shack does not commit to paying hourly employees more than the state-mandated minimum wage.

Garutti said his goal is to encourage people to grow within the company and eventually become managers.

“Our job is — day one — to say, ‘You’re going to start here. It’s 15 bucks an hour. We’re going to take you here,'” Garutti said, raising his hand to indicate the jump for a worker who starts out earning minimum wage ($15 per hour in New York) and could rise through the ranks.

On its website, the company offers a road map for growth. According to Shake Shack’s 2018 annual report, over 1,100 employees out of about 6,100 were promoted in 2018, about 58% of them women.

“What we have been dedicated to is, how can we help people start here, but then take the next step up, and I love when I go to a Shack and I meet managers whose first job in life was making a milkshake,” said Shake Shack Founder Danny Meyer,

It’s common for companies to focus their attention on fostering talent at the management level, said Jaime Klein, founder, and CEO of Inspire Human Resources, which helps companies hire workers.

“Oftentimes, the trend is to put budgets into developing and retaining leaders because the hope is that they will have the most positive impact on all the people that they manage, so the footprint, if you will, is bigger in terms of overall retention and strong employee engagement,” she said.

Taco Bell is testing out paying $100,000 salaries to some managers in order to set itself apart, attract more talent and ultimately increase sales at restaurants. Chipotle CEO Brian Niccol said that in 2019, the company’s focus on its general managers helped it improve customer experiences and efficiency in stores. Chipotle offers tuition reimbursement and lets hourly employees earn a bonus if their restaurant meets certain performance metrics.

The efforts have reduced both manager and crew turnover, Niccol said during a call discussing second-quarter earnings with analysts this summer.

For Shake Shack, hiring and holding onto good workers is essential as it continues to grow.

The chain, which started as a single hot dog truck in 2001, expanded slowly at first. Now it’s growing rapidly. About a quarter of all 281 Shake Shack locations opened their doors in 2019, and next year the company plans to open about 65 restaurants globally. It needs good managers to make sure those openings are smooth, and that the restaurants are up to Shake Shacks’ standards.

One way to convince employees to choose Shake Shack is by promising that even as the company grows, workers will feel prioritized.

“We need to say, ‘You’re the head of that restaurant … that’s the only one that matters in the world,'” Garutti told Harlow. “The bigger we get, the smaller we have to act.”

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