Shake Shack's millionaire founder Danny Meyer explains why he upped his fast-food workers' pay

Shake Shack prides itself on staying ahead of the curve, paying its people well above the fast-food industry average and the country’s minimum wages.

Shake Shack team members make on average $10.55 an hour, according to Glassdoor, which is almost $3 more than the $7.98 an hour PayScale reports the average American fast food worker makes. For comparison, McDonalds crew members in the US make an average $8.29 an hour, employees report on Glassdoor.

According to the US Department of Labour, the federal minimum wage is $7.25 an hour, and some places pay more than this, including New York, with a state minimum wage of $9 an hour, California at $10 an hour, and Washington DC, which has the highest minimum wage at $11.50 an hour. DC employees earn closer to $12 an hour.

The reason Shake Shack decided to implement wages well above the standard, according to the company’s founder Danny Meyer? It was about time.

“We looked at the fast-food industry and we said, ‘Alright, from a business standpoint, it has been a big success.’ But from a cultural standpoint, we didn’t think it had been such a big success,” Meyer said during a recent interview with Business Insider.

So he and his team went to the drawing board to consider all the things entrenched within the industry they would need to get rid of so they could be proud to take their kids to Shake Shack.

They came up with a few ideas, like how they would approach sourcing their food and how people would be hired and trained, and “a big part of it was how people were paid,” Meyer says.

“We looked at the food world and said, ‘Over the last 20 to 30 years, America has moved so far in terms of caring how animals are raised, in terms of caring how vegetables have grown, in terms of the environment — isn’t it time to think about people as well and how people are paid?'”

Meyer says this led to a “concrete decision” that Shake Shack would start employees out at a higher entry-level wage. Doing this has allowed him to hire higher-quality employees, he says, who then tend to stick around and rise up the ranks to manager positions.

“One of the things I’m proudest about is just how many of the managers at Shake Shack, who all have stock options, started off as hourly workers, but at a much higher rate than they might have made in the fast-food world,” Meyer says.

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