Shake Shack IPO Proves It's Possible To Make Money And Pay Your Workers Well

Here's proof that it’s possible for a burger joint to both pay its workers well and still make money.

Shake Shack on Monday declared its intention to go public, filing the necessary paperwork with the Securities and Exchange Commission. In those documents, the New York-based burger chain reported blockbuster growth in recent years, even as it pledged to keep paying its workers better than the industry standard.

If the Shake Shack model continues to thrive as the company grows, it could provide fodder for workers and protesters who say fast-food giants can afford to pay their low-wage employees more and still reap huge profits.

Shake Shack workers in Manhattan make a starting wage of $10 an hour, according to Shake Shack's filing. That’s higher than both New York’s current minimum wage of $8 an hour and the $8.75 an hour that will become the state’s base wage starting on January 1 -- though it is still less than the $12.75 it takes for a single person to get by in New York City, according to MIT's living wage calculator.

That starting wage makes Shake Shack an exception in the fast-food industry, where workers' median pay hovers between $8 and $9 an hour. Unlike the typical fast-food chain, Shake Shack suggests this is good for business.

“We believe that this enables us to attract a higher caliber employee and this translates directly to better guest service,” Shake Shack wrote in its filing.

So far, the strategy seems to be working. Shake Shack’s system-wide sales grew from $21 million in 2010 to $140 million last year. That growth bucks a broader trend in the burger industry, which is shrinking slightly, according to August data from Technomic, a food research firm. Shake Shack hasn’t closed or relocated any of its 63 eateries since opening its first restaurant in 2004.

This chart from Shake Shack's S-1 filing shows the company's sales growth over the past few years.

It might not be a simple thing for traditional fast-food restaurants to adopt Shake Shack’s model. For one, most of Shake Shack’s U.S. stores are company-owned. By contrast, most McDonald’s and Burger King locations are owned by franchisees, who operate with tight margins.

Shake Shack’s reputation for quality food, with burgers and fries that have a cult following, also gives it room to charge more. That makes keeping labor costs low less of a priority.

But fast-food joints are starting to follow the lead of Shack Shack and other “better burger” restaurants that feature limited menus with quality ingredients. McDonald’s recently announced it would expand its “Create Your Taste” program, which lets diners customize burgers with fancy toppings like guacamole and creamy garlic sauce.

Taco Bell Responds To 'Leaked' Gay Commercial

Earlier this month a gay-themed television commercial attributed to Taco Bell featuring two men cuddling and a same-sex wedding leaked onto the Internet.

In the clip, which can be seen above, two buddies stop at the fast food chain for a "breakfast pitstop" and then one of them ponders aloud, "I wonder what else we could fit in before work."

Among the activities the guys manage to check off on their joint to-do list: finding pirate treasure, riding jet skis, spooning on a picnic blanket and getting married.

Little information is provided on the video's YouTube landing page but the high quality of the ad had many believing that the clip was legitimately produced by Taco Bell.

After the video began going viral on Internet blogs late last week, Taco Bell sent the following statement to Mediaite.com on Friday night:

“We didn’t create this ad, but we can see the people who did share the same Live Mas passion for our brand -- and our breakfast—as we do. Although we cannot condone unauthorized use of our intellectual property, we are impressed with their work and would be open to meeting with them.”

In recent years companies have often chosen gay themes and plots for a variety of reasons from the comedic to the inspirational. In 2014 Honey Maid graham crackers and Cheerios both featured queer representations in advertisements for their products.

(h/t Towleroad)

Amazon's Enormous Same-Day Delivery Growth Comes At A Price

Amazon hit a new record for its same-day deliveries this holiday season, with 10 times as many items shipped as last year, the company announced in a Friday press release.

With the company racking up all these speedy deliveries, it might be worth revisiting the woes of workers tasked with transporting items from the e-commerce giant’s warehouses to customers’ doors.

In April, The Huffington Post’s Dave Jamieson profiled Myron Ballard, a driver based out of Washington, D.C., for LaserShip, a shipping service hired by Amazon to meet its same-day delivery deadlines.

Technically hired as an “independent contractor,” Ballard received little support for the work he was doing. Delivering about 150 Amazon packages a day might have earned him, on average, $225.

But that money was spread thin covering his expenses.

Per Jamieson’s story:

Ballard had to purchase the cargo van he drives for work. He doesn't get reimbursed for the wear and tear he puts on it; for the gasoline he pours into it on a near-daily basis; for the auto insurance he needs to carry; or for the parking tickets he inevitably racks up downtown. He doesn't even get reimbursed for the LaserShip uniform he's obliged to purchase and wear.

"It's like they want us to be employees, but they don't want to pay for it," the 45-year-old Ballard said at the time.

Amazon has little incentive to change this system. Here’s why it works out so well for the retail company:

For starters, a delivery company using independent contractors avoids paying payroll or unemployment taxes on its drivers, as well as workers' compensation insurance -- never mind basic workplace benefits like health coverage and a 401(k). Such companies also aren't obliged to pay workers overtime under federal law, meaning no time and a half when the delivery day stretches into a 12-hour shift. And since they pay drivers on a per-delivery basis, they don't owe them anything for non-delivery work, like loading the van at the warehouse before hitting the road, a task that can take up to two hours.

Amazon did not respond to a request for comment on Friday.

Make no mistake, Amazon has reason to celebrate success right now. In October, the company faced its biggest quarterly loss in 14 years, leading some profit-hungry investors and pundits to dub CEO Jeff Bezos a “grinch.” Sales growth, especially during the retail industry’s coveted holiday season, is one way of proving Amazon is on the right track. But during a time of year when everyone, delivery drivers included, traditionally celebrates with family, it may be worth looking into the real costs of this same-day delivery service.

9 Restaurants Open On Christmas 2014

Chinese food is the classic Christmas-Day fallback for anyone who's not cooking. But if you're looking for more options, you've got them.

A slew of U.S. restaurant chains will remain open on Thursday, though their hours will vary by location.

Perhaps lo mein isn’t your idea of a warm Christmas dinner. Or maybe you need a peppermint latte to power through gift-giving with your rowdy nephews.

Here’s a list of chains that confirmed to The Huffington Post that they will remain open, at least in some places. Check your local listings before venturing outside, since hours may vary. All of the following quotes are from company spokespeople.

Applebee’s

“Some Applebee’s and IHOP restaurants will be open, and some won’t. Consumers need to check with their local restaurants.”

Denny’s

“Denny’s will be open. In fact, it is one of America’s Diner’s busiest days of the year.”

Hooters

“Select Hooters locations will be open on Christmas Day. To check for local hours please visit www.hooters.com/locations and call ahead.”

IHOP

“Some Applebee’s and IHOP restaurants will be open, and some won’t. Consumers need to check with their local restaurants.”

KFC

“Some KFC restaurants will be closed on Christmas Day. It is really up to the franchise owner to determine operating hours on the Christmas holiday.”

McDonald’s

McDonald's did not respond to multiple requests for comment for this story, but in 2012 the fast-food giant began pushing franchise stores to stay open on Christmas, and this year many locations will be open, according to the International Business Times.

P.F. Chang's

“Some of P.F. Chang’s casino and mall locations are open, but guests are encouraged to call ahead.”

Starbucks

“Starbucks stores are a gathering place for the entire community and customers use our stores to connect over coffee in different ways every day. We are happy to welcome customers on Christmas Day in select store locations. Store hours vary by location, and stores will occasionally adjust their hours based on business and customer needs.”

TGI Fridays

“Most TGI Fridays restaurants will be open on Christmas. However, guests should call their local restaurant for holiday hours.”

You might notice some chains are missing from the above list. Olive Garden, Red Lobster and Chipotle told HuffPost they will remain closed on the 25th. Sorry, burrito lovers.

JPMorgan's $22 Billion Shortfall Is Basically An Illusion

By the Fed’s count, JPMorgan Chase may need about $22 billion in extra capital to meet its tougher new standards for keeping banks safe. That sounds like a lot, but in the context of the bank's hugely profitable business, it’s not a high hurdle to overcome.

A cursory look at how bank capital levels are calculated, and JPMorgan’s multibillion-dollar quarterly earnings, drains quite a bit of drama from the story.

The Fed on Tuesday announced new capital rules for U.S. banks, due to take effect in 2019, that are meant to be slightly stricter than international rules, known as Basel III. Capital is one way banks can fund their business. Debt is the other. Capital can be raised by selling stock or by keeping money the bank has earned. That money never has to be repaid to shareholders, unlike debt which must eventually be paid back to lenders. More capital and less debt makes banks less vulnerable to declines in the value of their assets.

JPMorgan's estimated $22 billion capital hole, according to the new Fed standards, is based on what are known as "risk weighted assets." Some assets (think U.S. Treasury debt) are less risky than others (think subprime mortgage bonds). Banks need to have more or less capital to account for that risk.

Change how you define "risk," or change how much capital you think a bank needs to have for each asset, and suddenly that $22 billion capital hole changes -- maybe dramatically. The bank could also change that capital hole by changing the mix of assets it holds, or shrinking its operations, or pulling back on business in certain countries.

"It's a whole question of measures," Stanford finance and economics professor Anat Admati, who has long advocated much higher capital levels at banks, told The Huffington Post. "There are so many knobs you can turn" to meet new capital requirements.

There is also a far simpler way JPMorgan, which earned $5.6 billion in its latest quarter, could make up a capital shortfall: keep more of its earnings. It would take just a year of such quarterly profits to raise $22 billion in capital, assuming JPMorgan retained all its earnings.

Of course, the bank doesn’t do that. In its latest quarter, JPMorgan paid $3 billion of its earnings to shareholders. Still, that left $2.6 billion to be retained and added to the bank’s capital.

That means JPMorgan could keep on its current earnings trajectory, leave its dividend and buyback plans alone, and still make up its capital shortfall in just two and a half years (ten quarters), without ever raising additional equity from the stock market.

As Admati said, “what does $22 billion really mean? That’s not a lot of money for them.”

The bank’s chief financial officer said as much on Wednesday, saying the new capital requirements would mean only "surgical" changes at the bank.

A JPMorgan spokesman declined any additional comment.

$22 billion is a headline grabbing number, but it’s an easily surmountable one. “I hate it when they talk about shortfalls,” Admati said, “because there are presumptions made.” Change those presumptions, and the number changes. Put the number in context, and it looks a lot smaller.

Recovery at Last?

Last week we got an actually good employment report — arguably the first truly good report in a long time.

Read the whole story at New York Times

Walmart Pulls 'I Can't Breathe' Ad After Eric Garner Decision

Walmart pulled a TV ad Thursday morning after complaints that the commercial insensitively recalled the death of Eric Garner, a black man who died after a New York City police officer put him in a chokehold.

The ad, for a Walmart-branded cell phone plan powered by T-Mobile, shows a black man giving his daughter a cellphone. To thank him, the daughter affectionately wraps her arm around his neck and starts taking selfies while the dad mutters, "I can't breathe."

The ad seems pretty innocuous, but "I can't breathe" were Garner's last words after NYPD Officer Daniel Pantaleo put him in a chokehold while arresting him for allegedly selling loose cigarettes in July. On Wednesday, a grand jury on Staten Island declined to indict Pantaleo, setting off a wave of protests across the country. "I can't breathe" has become a rallying cry for many of those demonstrations.

A viewer tweeted at Walmart after seeing the ad during NBC's "The Voice" Wednesday night.

@DarrellLondon @bpopken We can see how the ad could be viewed differently today than when it first aired. We’re recutting based on feedback.

— Walmart Newsroom (@WalmartNewsroom) December 4, 2014

Deisha Barnett, a Walmart spokeswoman, told The Huffington Post that the ad began airing over the summer, but she was unsure whether that was before or after Garner's death. The ad was in circulation until Thursday morning, when the company removed it in response to tweets complaining about the ad.

Hat tip: NBC News

Child Care And Education Costs Are Off The Charts. Literally.

The costs of educating and caring for children just keep soaring.

Just check out this chart from a recent Brookings Institution analysis of consumer price data from the Bureau of Labor Statistics, showing how various costs have changed relative to median U.S. household income in recent decades:

There are several striking things on this chart. For one, the costs of energy, gasoline and hospital services are rising far more quickly than income. Meanwhile, the prices of appliances and personal computers have fallen. And the price of a new car has risen a lot more slowly than income.

But the most jaw-dropping thing is the dark blue line that charts the rise in child care and tuition costs. That line goes so high it doesn't even fit on the chart. So we refigured the chart, in an effort to show just how goddamned high child care and tuition costs have gotten:

Child care and tuition costs include elementary, high school and college tuition and fees, as well as child care and nursery school, according to the BLS.

Here is a graphical representation of what that means for parents:

Though they're not shown on the chart, other important prices are also outstripping income, including rent, legal and professional services, and hotel rates.

"These large sectors and the high prices they charge are contributing heavily to the slipping economic position of American households," the Brookings analysts wrote.

The households they're referring to are low- and middle-class households, which suffer more when the costs of necessities rise. That has added to the pain of the slow destruction of the middle class in recent decades. It has also been a drag on the U.S. economy, which depends heavily on consumer spending. As the Wall Street Journal noted in its own analysis of consumer price data, the meteoric rise in the costs of health care, rent and education has led to a slowdown in spending on clothing and entertainment. As a result, large retailers and restaurant chains are struggling to get customers to spend.

Takata Corp., Maker Of Problematic Air Bags, Says Recall Decision Is Up To Automakers

WASHINGTON (AP) — Japan's Takata Corp. rejected federal regulators' demand Wednesday for an expanded, nationwide recall of millions of air bags, setting up a possible legal showdown and leaving some drivers to wonder about the safety of their cars.

Amid the standoff, Honda Motor Co. decided to act on its own and recall cars with the potentially defective equipment in all 50 states. But other automakers have yet to make a decision.

At issue are air bags whose inflators can explode with too much force, hurling shrapnel into the passenger compartment. At least five deaths and dozens of injuries have been linked to the problem worldwide.

Over the past six years, Takata and 10 automakers issued a series of recalls covering 8 million cars in the U.S., mostly in high-humidity areas such as the Gulf Coast, because of evidence that moisture can cause the propellant to burn too quickly. But after incidents in California and North Carolina, the National Highway Traffic Safety Administration began pressing for the recall of 8 million more vehicles from coast to coast — a demand that Takata flatly rejected.

"There's not enough scientific evidence to change from a regional recall to a national recall," Hiroshi Shimizu, Takata senior vice president of global quality assurance, told a House subcommittee on Capitol Hill.

Takata also contends that NHTSA has authority to seek recalls only from auto manufacturers and makers of replacement parts, not from original parts suppliers — a position NHTSA contests.

Shimizu insisted that the air bags are safe: "I would drive a car with a Takata air bag."

David Friedman, NHTSA deputy administrator, said he was "deeply disappointed" by Takata's response.

The agency is now gathering proof that a recall is needed, which it will present at a public hearing. After that, NHTSA could order Takata to undertake a recall, and could take the company to court if it refuses. But Friedman acknowledged that could take months.

"It's time for industry to step up," Friedman told lawmakers. "Until (Takata) and automakers act, affected drivers won't be protected."

The stalemate is likely to add to the confusion among car owners, many of whom are already bewildered because some of the recalls have covered driver's-side air bags, while others applied to passenger-side air bags, and a few covered both. The NHTSA-demanded recalls would involve driver's-side air bags.

At Wednesday's hearing, Rep. Jan Schakowsky of Illinois, the panel's senior Democrat, said she has received letters from constituents "who are literally afraid to drive their cars."

Rep. Billy Long, R-Mo., warned that driving a car with a Takata air bag is "tantamount to driving down the highway with a shotgun pointed at you."

Drivers whose cars have been recalled should have received notices in the mail. A driver can also key in the vehicle's identification number at www.safercar.gov or call the dealer to see if the car is covered.

But for those outside the recall zone who want to know if their air bags are safe, things get trickier. It's difficult to tell if a car has a Takata air bag inflator. Car owners can try asking their dealer, but even they may not know.

Honda is Takata's largest customer, but the company also made air bags for Ford, Chrysler, Mazda and BMW. Mazda said Wednesday that it will probably expand its recall, while BMW said it is evaluating the situation.

Ford and Chrysler both expanded passenger air bag recalls on Wednesday to include states outside of the initial high-humidity zones. But neither automaker recalled additional driver's side air bag inflators, as Honda did.

In a statement late Wednesday, NHTSA said Chrysler's response was insufficient, and its plan to notify customers in January is too late.

Rick Schostek, executive vice president of Honda North America, said Honda is acting even though Takata hasn't identified problems beyond the current recall areas. Honda didn't say how many vehicles will be recalled, but the recall includes some of its most popular vehicles, including the 2001-07 Accord sedan and the 2002-06 CR-V SUV.

"Our customers have concerns and we want to address them," Schostek said.

Lawmakers expressed frustration that, after a decade, Takata still isn't certain about the cause of the explosions. They also questioned whether the replacement air bags made by Takata will be safe.

Takata said it has tested 1,057 inflators taken from locations outside the high-humidity zone, and none of them ruptured.

Wednesday's hearing was the second in Congress regarding Takata air bags. Earlier this year, Congress held a series of highly publicized hearings into General Motors' handling of a recall of cars with defective ignition switches that are now linked to 36 deaths.

"I'm sorry to say that it has been a bad year for auto safety," Rep. Fred Upton, R-Michigan, said at the opening of the hearing.

AP Auto Writers Tom Krisher and Dee-Ann Durbin reported from Detroit. Yuri Kageyama contributed from Tokyo.

Pizza Hut's New Menu Supposedly Reads Your Mind Then Picks Your Toppings (In 2.5 Seconds)

Pizza lovers who just can't make up their minds about what to order, rejoice! Pizza Hut has developed a new tablet-based menu that relies purely on customers’ eye movements to create their perfect pizza.

The “Subconscious Menu," which is only in test mode in the United Kingdom for now, first syncs a customer's eye movements to a tablet by asking the customer to follow a moving Pizza Hut logo on the screen. Then, the screen shows images of the chain’s 20 most popular ingredients.

Mmm ... barbecue sauce.

After just 2.5 seconds, voilà! The menu reveals the customer’s "perfect" pizza based on the ingredients he or she has been staring at the longest. There are 4,896 possible combinations, according to a Pizza Hut press release from Nov. 28, so that's pretty fast.

Unfortunately, we couldn't try out the system ourselves, and neither can you -- yet.

So far, Pizza Hut has only tested the system with select journalists and customers in the UK, and claimed in the release that it has had a 98 percent success rate. The company did not immediately provide further details about the methodology of the trials it conducted.

But obviously, no one's tied to the first suggestion that the menu generates. If the customers aren’t happy with their pizza, they’re able to start the process over again, or they can just order the traditional way.

The system is powered by Swedish company Tobii Technology, which specializes in eye-tracking technology. A spokesperson for Pizza Hut restaurants told The Huffington Post in an email that the software is not yet available for purchase, but is expected to become publicly available in 2015.

"This menu innovation really is ahead of its time," the spokesperson wrote.

The technology, which took six months to develop, is being incorporated into Pizza Hut's ordering shortly after the chain unveiled a new menu and other rebranding measures.

"We love to excite and innovate," Kathryn Austin, Pizza Hut's head of marketing, said in the press release. "This year we’ve redesigned restaurants up and down the country and launched a brand new menu with lots tasty new options. But we don’t just want to stop there."

But as to when we'll get to allow our subconscious to create pizza, the future is unclear.

H/T: Entrepreneur

Black Friday Weekend Slows Down As Allure Fades

NEW YORK (AP) — Black Friday fatigue is setting in.

Early discounting, more online shopping and a mixed economy meant fewer people shopped over Thanksgiving weekend, the National Retail Federation said Sunday.

Overall, 133.7 million people shopped in stores and online over the four-day weekend, down 5.2 percent from last year, according to a survey of 4,631 people conducted by Prosper Insights & Analytics for the trade group.

Total spending for the weekend is expected to fall 11 percent to $50.9 billion from an estimated $57.4 billion last year, the trade group estimated.

Part of the reason is that Target, J.C. Penney, Macy's, Wal-Mart and other major retailers pushed fat discounts as early as Halloween. Some opened stores even earlier on Thanksgiving. All that stole some thunder from Black Friday and the rest of the weekend.

Still, the preliminary data makes retailers worried that shoppers remain frugal despite improving employment and falling gas prices.

Matt Shay, the trade group's CEO, said he thinks people benefiting from the recovery may not feel the need to fight crowds to get the deepest discount on a TV or toaster. And those who feel like the recession never ended may not have the money and will stretch out what they spend through Christmas.

And shoppers are still feeling the effects of high food prices and stagnant wages.

"While they're more optimistic, they're very cautious," Shay said. "If the deals are not right for them, they're not going to spend."

Bottom line: Expect more deep discounts, all season long.

"Every day will be Black Friday. Every minute will be Cyber Monday," he said.

That could be what it takes to get shoppers to open their wallets for the holiday shopping season, which accounts for about 20 percent of annual retail sales.

Besides economic factors, people are becoming more discerning when they shop. Armed with smartphones and price-comparison apps, they know what's a good deal — and what's not.

Kimani Brown, 39, of New York City, was among the Black Friday defectors. After four years of braving the crowds, the sales failed to lure him out this year.

"I consider myself a smart shopper. And it's not as alluring as it used to be," Brown said. "It's a marketing tool, and I don't want to be pulled into it."

He also said the frenzy pushed him to overspend, and he paid the price in January on his credit card statement.

Instead, he said he will look online Monday, the online shopping day often called Cyber Monday.

Some who went shopping on Thanksgiving felt they were doing it against their will. Cathyliz Lopez of New York City said she felt forced to shop on the holiday.

"It's ruining the spirit of Thanksgiving," the 20-year-old said Thursday. "But I was checking all the ads, and the best deals were today."

The National Retail Federation is still predicting a 4.1 percent increase in sales for the season. That would be the highest increase since the 4.8 percent gain in 2011.

Some stores and malls had reason to be optimistic.

Dan Jasper, a spokesman at Mall of America in Bloomington, Minnesota, said customer counts are up 5 to 6 percent for the four-day weekend. One plus: Shoppers were buying more for themselves, a sign of optimism.

"They felt confident in the economy," he said.

CEOs at Target and Toys R Us said they saw shoppers not just focusing on the doorbuster deals but throwing extra items in their carts.

Macy's CEO Terry Lundgren told The Associated Press on Friday that he's hoping lower gas prices will help spending.

"There's reason to believe that confidence should continue to grow. That should be good for discretionary spending," he said.

Some of those discretionary dollars are migrating online.

Target said Thanksgiving saw a 40 percent surge in online sales and was its biggest online sales day ever. And Wal-Mart reported Thanksgiving was its second-highest online day ever, topped only by Cyber Monday last year.

From Nov. 1 through Friday, $22.7 billion has been spent online, a 15 percent increase from last year, according to research firm comScore. On Thanksgiving, online sales surged 32 percent, while Black Friday online sales jumped 26 percent.

In stores, shoppers spent $9.1 billion on Black Friday, according to research firm ShopperTrak, down 7 percent from last year. That was partly due to a 24 percent surge in Thanksgiving sales, to $3.2 billion.

ShopperTrak estimated that in-store sales for the two days combined slipped half a percent to $12.29 billion.

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