There are two parallel conversations taking place as well. One is the cost to build, where lumber and steel prices surged in recent months. Garutti said Shake Shack expects the overall cost to build stores to increase for “some period of time.”
“Nobody knows that this will be a long or short-term deal,” he said. “There's obviously a lot of demand for growth, and limited supply on some of these items. So we feel prepared for that. We feel ready.”
And then there’s the “people investment” Garutti mentioned.
Garutti said he’s walked around his neighborhood and seen restaurants closed early due to staffing. It’s something you rarely noticed before COVID. “Look, you can read any article today and understand what that pressure looks like. It's obvious, it's clear, we're not immune to that,” he said.
To date, there hasn’t been a material impact on Shake Shack. It’s a market-by-market issue that’s often out of the company’s control. But there are internal efforts taking place to shield Shake Shack from the hiring crisis. According to the most recent jobs report, restaurants added 187,000 jobs in April, and the overall unemployment rate was 6.1 percent. The sector now employs 10.6 million people, which is still significantly below the 12 million or so before COVID.
“So, look, we gave the majority of our Shack's raises last year, the entry level wages throughout the country, most places, that's part of the pressure on our labor line that you've seen and that we are proud to invest in our team,” Garutti said. “And there's no doubt, there's a lot of call for great people right now. So we'll be looking to keep strengthen our teams, and it'll be a challenge.”
In 2020, Shake Shack created more than 1,097 jobs company-wide. It reported 1,500-plus internal promotions, with 56 percent going to women and 76 percent to people of color.
The company provided more than $6 million in additional compensation and bonuses to employees to support them through COVID.
Shake Shack also provided paid off time to vote and launched Shift Up, a leadership development program equipping shift managers with skills needed to advance to manager roles.
So to Garutti’s point, it’s not cheap to compete in this war for talent.
GMs at Shake Shack are eligible for an equity grant of $10,000 in stock annually. There’s quarterly incentive bonus payouts for management. All employees can receive employer-paid short-term disability.
Shake Shack also offers:
- 401(K) with match eligibility
- Parental leave for both birth and adoptive parents
- A paid time off policy
- Dependent Care FSA
- Group life insurance and long-term disability benefits
- Service award program for career milestones •
- Team Member dining discounts
- Commuter benefits
Just during COVID, the company provided a 10 percent premium pay to all hourly workers supporting operations from April through August. Shake Shack awarded year-ended bonuses to hourly employees based on position and service time. It guaranteed bonus payouts to management for Q2 through Q1, and paid 100 percent of elected benefits premiums for furloughed workers.
Turning to additional growth, Shake Shack plans to open between 15–20 licenses restaurants in 2021 before boosting to 20–25 next year.
“So when we think about development, we really think we can be everywhere,” Garutti said of the big picture. “I mean, we've got a big opportunity here in every one of those major regions of the United States. We're obviously pretty focused on California, some of the other major regions in the northeast that we've been strong. But we're not going to let the pandemic dictate the growth plan solely. There's a lot of learning what's happened this year. And we're going to add that to our already, robust development plan.”