Shake Shack's High Labor Costs Helping to Push Automation

The restaurant industry is slowly getting priced out of the labor market, and chains such as Shake Shack (NYSE: SHAK) that have led the charge to raise wages are now finding it's an expensive proposition. After saying just last year automation would not replace humans at its restaurants, Shake Shack is introducing a self-order kiosk at its newest New York City site. It might not eliminate employee counts immediately -- the kiosks will be manned by "hospitality champs" to ease the customer transition -- but it's obviously the first step in the process.

The reason for Shake Shack's apparent change of heart is that labor costs are rising. In New York, the minimum wage is rising to $13.50 at the end of this year and jumps to $15 per hour in December 2018.

Shake Shack has been an advocate for higher minimum-wage laws and voluntarily raised its own employee pay to $12.00 an hour last year. At the New York test site, workers will receive $15 an hour, which the chain says is a prelude to raising them across the board at all of its restaurants.

Source: Fool.com