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