Dive Brief:

• Shake Shack's recently released Stand For Something Good 2020 report shows the company promoted more than 1,500 employees in 2020, with 56% of those promotions going to women and 76% going to people of color. The company also established four employee resource groups and a dedicated Diversity, Equity and Inclusion function to advance its commitment to equal opportunity for growth.
• Shake Shack set new equity goals for 2025, including gender parity in restaurant and corporate leadership roles, 50% people of color in restaurant leadership roles (currently 35%) and 30% people of color in corporate leadership roles (currently 20%). The company will also seek new partnerships with minority and women-focused organizations within that timeframe.
• The company also launched Shift Up, a leadership development program providing shift managers with skills needed to advance to management roles. Shake Shack partnered with the Food Education Fund to develop the program, which includes classroom-based instruction, experiential learning and networking. Shake Shack reports that 75% of its inaugural cohort are women and people of color.

Dive Insight:

These upward mobility and diversity programs are becoming increasingly important as restaurant companies contend with significant labor pressures. They provide incentive for employees to stick around — a big deal in an industry with high and expensive turnover.

Other chains are adopting similar programs in an attempt to reduce those turnover numbers. Raising Cane's, for example, recently launched a leadership development program aimed at training managers to become operators at company-owned locations. Whataburger just announced it will increase responsibilities and pay, including six-figure salaries, for its general managers "with an emphasis on finding business leaders to run its multi-million dollar restaurants." Taco Bell has also added more benefits to incentivize employees to work toward general manager roles.

Striving to improve diversity is also critical in the restaurant space. At Shake Shack, people of color represent 58% of Shake Shack's management team, while women make up 51% of this team. In the entire industry, four in 10 restaurant managers and supervisors are minorities, according to the National Restaurant Association. Those numbers decrease significantly in the C-suite, however. As Restaurant Business reported, federal data shows the industry has lagged in developing a diverse talent pool at the top.

Championing a diverse workforce could also help restaurants position themselves favorably in a challenging labor market. Above-average diversity in leadership can also lead to a 19% improvement in innovation revenue, according to the Boston Consulting Group. It could also help quell harassment issues that plague much of the industry. Sexual harassment is more common in the restaurant space than any other business segment, and having more women at the decision-making table could potentially spark greater awareness of these issues as well as protections for vulnerable female employees. 

Shake Shack is one of several companies setting ambitious diversity goals. McDonald's and Chipotle both recently said they were tying executive bonuses to hitting diversity targets. Yum Brands has also committed to the Paradigm for Parity coalition to advance women to senior roles and achieve gender parity in its global leadership team by 2030.