Shake Shack is a national chain specializing in hamburgers, French fries, and milkshakes. They charge somewhat more
Question:
Shake Shack is a national chain specializing in hamburgers, French fries, and milkshakes. They charge somewhat more than Mcdonald's and Burger King but aim to have higher food quality and more variety.
Although sales in spring 2020 dropped by almost 50 percent compared to a year ago, Shake Shack made two changes in its compensation package for restaurant employees in response to COVID-19: (1) a bonus of $250 to $400 (depending on position) for all employees payable December 31 and (2) an increase in their hourly wage rate of 10 percent, which started last April.
a) Explain the economic logic behind why Shake Shack took these steps. What incentives will they develop and how will they impact productivity and costs? Do you see any downside?
b) Many other fast-food chains have provided bonuses and raises this year because of the pandemic. Burger Prince is not one of them. Explain why Burger Prince might not think its best interest will be served by providing the same bonuses and raises as their competitors.
Smith and Roberson Business Law
ISBN: 978-0538473637
15th Edition
Authors: Richard A. Mann, Barry S. Roberts