How does Dick’s Drive-In pay workers $19 an hour with a menu completely under $5?

Dick’s Drive-In has always paid high wages and provided amazing benefits for its employees, like college scholarships, child care, and health care, and at the end of September, the company raised its base wage from $18 to $19 an hour.

Last week I got a press release from Taco Time, announcing a test program that will pay entry level crew members $20 an hour at its Issaquah and North Bend locations, its shortest staffed restaurants. All positions include paid vacation, medical and dental insurance, a 401k, and free meals for staff and their families.

A couple weeks ago, Seattle’s Dan Price — the CEO who made headlines for taking a pay cut so he could pay all of his employees $70,000 salaries — tweeted the following:

Dick's burgers in Seattle just upped its minimum wage to $19. It gives workers free health care, 3 weeks paid vacation, 50% 401(k) match and $9,000 for tuition/childcare.

Its basic burger costs $1.80.

But I was told that paying people a living wage would make burgers cost $20?

— Dan Price (@DanPriceSeattle) September 23, 2021

So how do these companies do it? Dick’s Drive-In President Jasmine Donovan is in a particularly good position to provide some insight.

“I am the granddaughter of Dick Spady, our namesake and one of our three co-founders,” Donovan said.

She said Dick’s raised its prices earlier this year to afford the pay increase and because of rising costs associated with supply chain issues.

“Our Deluxe [burger], at some of our locations, went up by 25 cents; some other products went up five cents or 10 cents,” she explained. “We appreciate that customers don’t mind. We like to be able to pay the highest wages and benefits in the industry, it’s something we’re very proud of. But to do it, we have to sell a lot of burgers and sometimes have to charge a little bit more.”

But not that much more; the most expensive thing on the menu is $4.25. Of course, all restaurants are different and Donovan recognizes that Dick’s has an advantage as a beloved, 70-year-old heritage burger joint.

“We’ve been around a long time, we own some of our own real estate, so we control our own destiny there,” she described. “We also sell a lot of burgers, fries, and shakes at all hours of the day and night.”

She says other business owners often ask for advice on how to offer employees the benefits that Dick’s offers.

“I give them the same advice my grandfather had when he was starting the business,” Donovan recounted. “A business, first step, is it has to make a profit. The next step is to invest in your employees. They’ll take better care of your customers, which will help you earn more profit. When they move on from your business and do other things, they’re evangelists for your company and that helps you make more profit.”

“Once that virtuous cycle is going, you can also invest in your community because if your community is thriving, your business will thrive,” she continued. “And so for these businesses that come to us asking what they should do first, the biggest thing that I tell them is talk to your employees. Ask them what is it that your employee population would want. Talk to them! Maybe it’s child care, maybe it’s a transportation stipend, maybe it’s more flexible schedules. Start with that. And if you can’t do it for everybody or everything that they would want, just do some part of it, then work your way up from there.”

Case in point, during my interview, a man waiting in line mentioned that he worked at Dick’s around 1968, that he made $5 an hour and was offered scholarship money, and he’s still a loyal customer.

If you’re thinking burger flippers don’t deserve to make $19 an hour, Donovan says working at Dick’s isn’t an entry level job, and they are quite picky about who they hire.

“When people say, ‘Oh, you’re going to go flip burgers,’ it’s not that simple,” she noted. “We have an orchestrated precision going on in our restaurants. It is a lot of work, and at the same time there also has to be jobs for people who really just need their very first attempt at a job. Ours isn’t that one and those jobs are going to pay less than our jobs, right? So for me to get the people that I need in my restaurant, I have to pay $19, but the state minimum wage is going to be $14.50 in January.”

There’s a funny disconnect associated with the restaurant industry. Many don’t consider “burger flipping” a respectable career, but they sure would be upset if there weren’t any burgers for sale.

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