Payday

09.09.13

Radical Fast Food Joint Doubles Down on High Wages

So you thought $12 an hour for a burger place was revolutionary? Try $15. Daniel Gross talks to the owners of Detroit’s Moo Cluck Moo as they supersize starting wages.

In August, I spoke with the owners of Moo Cluck Moo, a Detroit-area burger and chicken fast-food joint that is aiming to do something revolutionary: pay far more than the minimum wage. In an industry that treats labor as a commodity, co-owners Brian Parker and Harry Moorhouse decided to turn the conventional wisdom on its head. They’d start workers at $12 an hour, and design their business so that it could run profitably at those wages. Rather than take advantage of the epic slack in the Detroit-area labor market, they’d aim to set a slightly higher standard.

In exchange for paying higher wages, Moo Cluck Moo’s owners got better service, more skilled and committed employees, and a lot of free publicity. After our article, Moo Cluck Moo was featured on outlets like Huffington Post and MSNBC. Meanwhile, executives at other chains were crouched in a defensive pose as workers walked out over low wages.

Now, Moo Cluck Moo is doubling down on its high-wage strategy. Brian Parker says that beginning October 1, the company will start employees at $15 an hour. That’s a 25 percent increase from $12, and it represents the living wage level that workers are demanding and that many critics regard as foolish.

Why $15? “We always wanted to be at $15 an hour,” said Parker. “It just feels human to do it.” 

Very few businesses would seek unilaterally to increase the cost of their main input by 25 percent. For companies operating on slim margins, that would be self-defeating. But Parker said there’s a method to this madness.

First, he believes his employees deserve it. Working at a quick-service restaurant is a difficult, demanding job. People have to multi-task. They’re coping with long lines and expectations of rapid service. These are the people who take care of the customers, and this is a competitive business in which customer service matters a great deal. “It’s not an easy job to do,” said Parker. “We’ve got a line out the door.”

And while Moo Cluck Moo has only been in business since the spring, Parker believes higher wages lead to better results. “We’ve had very low turnover,” said Parker. “Of the people that are working for us, we don’t have anybody disgruntled.” Over the weekend, three customers came up to Parker, without prompting, and thanked him for the quality of the customer service. Paying people more means you spend less time firing, hiring, and training. And Parker and Moorhouse would prefer to spend their time thinking about the business than supervising employees. “If I have to babysit these people, I’m a high priced baby-sitter.”

So you thought $12 an hour for a burger place was revolutionary? Try $15.

At any given time, five people are on the job. So increasing the hourly wages from $12 to $15 will mean boosting the hourly cost of operations by $15. That’s basically the cost of two transactions per hour.  Parker and Moorhouse are wagering that productivity, the quality of customer service, and the publicity they can buy with that extra $15 an hour is a decent investment.

Now, a reality check. Moo Cluck Moo, which has been in business for less than a year, has a single restaurant. And while it is an improvement over $12 an hour, $15 an hour is hardly a princely sum. Annualized, it’s about $31,200. But it’s a start. And it is refreshing to see businesspeople designing companies that can accommodate above-market wages. Every day Moo Cluck Moo is open, it stands as a rebuke to an industry that says it can only function by paying crappy wages.

Oh, and Parker said this fall Moo Cluck Moo will likely being expanding.