Dive Brief:
- Shake Shack announced a reward opportunity for employees that provides year-end bonuses to all of its workers. The company said in an email that this program serves as "a continued thank you" to its teams. Bonuses will range from $250 to $400 depending on position.
- The company is also guaranteeing bonus payments to all managers through both Q3 and Q4.
- This announcement comes after the company ended a 10% bonus pay program for its hourly workers, a program that had been in place from the end of April to Aug. 19.
Dive Insight:
That 10% bonus pay program put into place early in the pandemic outbreak helped retain employees, according to Nation's Restaurant News.
During the company's Q2 earnings call, CEO Randy Garutti said the company paid $2.4 million across "premium pay, guaranteed bonuses and scheduling-related premiums to our teams to recognize the incredibly challenging conditions." He added that the company will continue to support its teams into Q3. Still, that's a challenge when sales are down by 39%, as they were for Shake Shack during Q2.
But by making this adjustment, Shake Shack continues its long-standing focus on employee benefits, which includes higher wages, a transit discount program, corporate fitness discounts and more. The company has also issued equity awards of $10,000 to each of its general managers, offers 401K eligibility and implemented a four-day work week.
The chain's objective has long been employee retention, and for good reason. Restaurant turnover is expensive, and the rate is high. And, during an uncertain environment like the novel coronavirus pandemic, labor needs remain a big question mark. Labor is typically the highest cost for restaurant operators, so it's not easy to create a contingency plan. Incentivizing employees to stick around might be the best approach at any time.
A number of restaurant chains have stepped up their bonus incentives during the crisis. During its Q2 report, Yum Brand's CFO Chris Turner said Taco Bell paid frontline employee bonuses, while Wingstop paid performance-based bonuses and incentive pay associated with COVID-19 for team members during the quarter. Manager, field leader and apprentice bonuses were handed out by Chipotle as well, while McDonald's gave bonuses to all of its employees at corporate-owned stores in May.
As the competition over labor picks back up, those signs of appreciation may be even more important on the other side of this crisis. As Dave Bagley, managing director with Carl Marks Advisors, recently told Forbes, "keeping your long-term employees and managers close to you is important so you're not having to rebuild your whole organization... Labor is what you have to spend your money on."
