Shake Shack is a nationwide chain of fast-food restaurants. They have added six more victims of California’s $20 minimum wage. For those unfamiliar with the Shack, the company describes their business like this:
Shake Shack is a modern day “roadside” burger stand serving a classic American menu of premium burgers, hot dogs, crinkle-cut fries, shakes, frozen custard, beer and wine. With its fresh and simple, high-quality food at a great value, Shake Shack is a fun and lively community-gathering place with widespread appeal.
And from the company’s financial statements: [emphasis added]
Since the original Shack opened in 2004 in NYC’s Madison Square Park, the Company has expanded to over 540 locations system-wide, including over 350 in 33 U.S. States and the District of Columbia, and 190 international locations across London, Hong Kong, Shanghai, Singapore, Mexico City, Istanbul, Dubai, Tokyo, Seoul and more.
As a historical note, former president Barack Obama famously did a counter slide at Shake Shake Dupont Circle, Washington, DC.
Obama counter slide at Shake Shack Dupont Circle, Washington, DC
By the Numbers
Actually, it’s a lot more than six victims. Shake Shack had 43 restaurants in California. They plan to reduce that number to 37 immediately, with 3 more to be eliminated in the near future. Five closures will be in the Los Angeles area with the remaining shuttered outlet in Oakland. The other three locations are yet to be determined. The New York Post reported this story August 31.
But the true victims are the employees who will be forced to relocate or look for a new job. Honestly, if relocating means getting out of Oakland or Los Angeles, the decision should be easy.
The Post reported that the company blamed the closures on “the … result of a periodic evaluation of its portfolio of company-operated units …” A spokesman added, “These Shacks are not projected to provide acceptable returns in the foreseeable future.”
One obvious cause is the $20 minimum wage and the overbearing regulation of the fast food industry by California government. But the company is keeping 34 locations open. They also announced that employees in the six soon-to-be-former locations would be offered the chance to move to other locations.
Crime, No Punishment
That implies something special about Oakland and Los Angeles. Here’s the short version. Both cities are wracked by crime, homelessness, and a very large decline in the quality of life. Retail outlets have closed in both cities because of rampant theft. The activities go beyond property crimes to include violence. Los Angeles, under the tender, loving care of District Attorney George Gascôn, has a policy of releasing nearly all criminals soon after their arrest, often with no bail. Sentences are reduced, many well below state guidelines. The results are entirely predictable.
Using the location finder on the company website, my best guess is that Shake Shack has 26 stores in the greater Los Angeles area.
Greater Los Angeles 26 locations. (click for larger image.)
I won’t presume to guess which five will bite the dust. But luckily, Oakland is a different matter. There are Shake Shack stores in Oakland and nearby Emeryville. Here’s the location of the Oakland shack.
Oakland location
Oakland store address
I had suspicions about that location, so I went looking for crime maps. I found CrimeGrade.org. https://crimegrade.org/safest-places-in-california/ Focusing on that Oakland neighborhood, here’s what I found. (Red is F, lots of crime. Lighter red is D.)
Crime at Shake Shack Oakland store location (click for larger image)
Yeah, given all the monetary costs, I’d pick that one to shut down.
Shake Shack Responds
Shake Shack declined to comment on the role the $20 minimum wage played in this decision. But the New York Post article included this tidbit:
It’s the first time Shake Shack will close restaurants for purposes that were not construction-related, a spokesperson told trade publication Restaurant Business, which first reported the news.
It’s not hard to read between those lines.
