Shake Shack Replaces Humans With Robots

Fast-food chain was once hailed by President Obama for paying high entry-level wages

Shake Shack
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• October 3, 2017 11:40 am


The restaurant chain President Barack Obama once hailed for paying high entry-level wages is opening a store staffed by robots, rather than human cashiers.

In 2014, Obama and Vice President Joe Biden dropped into a Washington, D.C., Shake Shack in a photo-op designed to boost the administration's calls for a $10.10 minimum wage—a 40 percent hike over the federal minimum of $7.25. The pair ate lunch with four workers, dining on burgers and fries.

When asked by the press pool why the pair chose the DuPont circle fast food eatery, Obama cited its wage practices, saying it had "great burgers and pays its employees more than 10 bucks an hour."

A forthcoming Shake Shack location in New York City—where the Obamas are looking to live in retirement—plans to open with a workforce of robots rather than human employees, according to the New York Post. A restaurant set to open in the East Village will be staffed with robot ordering kiosks, which do not accept cash. Diners will place orders on apps and receive alerts via text message with a few "hospitality champs" on site to address potential tech glitches in the new machinery.

"The Astor Place Shack will be a playground where we can test and learn the ever-shifting needs of our guests," Shake Shack CEO Randy Garutti told the New York Post. "[It] represents our dedication to innovation and to providing the best for our guests and for our teams."

The restaurant plans to ramp up wages for those employees lucky enough to find work at the mechanized restaurant. Garutti said starting wages will be $15 an hour—more than double the federal minimum and the rate endorsed by political giant Service Employees International Union (SEIU) and the 2016 Democratic Party Platform. Labor watchdogs said the higher wages do not make up for the lost opportunities for entry-level workers.

"This is why the economic fantasies of Barack Obama and the ‘Fight For $15' just aren't practical when confronting the reality of running a business in 2017," said AR Squared spokesman Jeremy Adler. "As economists have been saying for years, the impact of dramatic minimum wage increases is fewer jobs and economic opportunities for working people, as Shake Shack is demonstrating today."

The $15 minimum wage has spread to liberal cities and states across the country after a multi-million dollar protest campaign from SEIU, which has long tried to unionize fast food and franchise companies. California and New York have taken on wage hikes that will eventually bring wages to $15 an hour in the next three to four years. Seattle made history as the first city to reach the $15 rate in 2017. Research into the city's experiment, however, suggests it has hurt the workers it intended to help. Scholars from University of Washington found that low-income workers saw a steep decrease in their take-home pay when the city moved to $13 an hour in 2015.

"The lost income associated with the hours reductions exceeds the gain [in hourly rates]," the report says. "The average low-wage employee was paid $1,897 per month. The reduction in hours would cost the average employee $179 per month, while the wage increase would recoup only $54 of this loss, leaving a net loss of $125 per month (6.6%), which is sizable for a low-wage worker."

Another team of researchers from the University of California-Berkeley disputed those findings and reported that new wages benefitted workers without costing them opportunities. Critics were dismissive of the Berkeley after public records revealed that the team coordinated their findings with a union public relations firm and the office of disgraced ex-Mayor Ed Murray, who resigned in September after multiple accusations of sexually abusing minors.

The robotic Shake Shack will open later in October.

Published under: Barack Obama, Minimum Wage