CAKE Cheesecake Factory Inc

Chipotle Mexican Grill Inc. plans to hire 4,000 employees in a single day next month, seeking to counter a tightening market for restaurant labor by dangling the possibility that high-performing recruits could someday earn six-figure salaries and stock in the burrito chain.

The planned Sept. 9 hiring binge—which would expand Chipotle's 59,000-member workforce by nearly 7%—is one of the starkest examples yet of restaurant chains stepping up recruitment efforts as the industry struggles to attract and retain employees. A stronger economy, rising demand for restaurant meals and a string of minimum-wage increases imposed by cities and states have shrunk the pool of available workers.

"The economy has been thawing, more restaurants are opening, and there are fewer job applicants than there were several years ago," said Monty Moran, co-chief executive of Chipotle.

Some competitors have responded by boosting wages and offering more perks to employees, part of what Wendy's Co. Chief Financial Officer Todd Penegor earlier this month called an industry "war on talent."

McDonald's Corp. and Cheesecake Factory Inc. recently raised employee wages. Starbucks Corp. is providing tuition reimbursement and financial aid to employees who enroll in an online bachelor's degree program, and McDonald's said it would help pay for employees to earn their high-school equivalency degree and take college classes.

Chipotle, too, has beefed up benefits. It has expanded college-tuition reimbursement to all hourly workers, added paid sick days and increased the amount of paid vacation it offers.

Average U.S. hourly wages for production and nonsupervisory employees in limited-service restaurants rose 3.3% to $9.62 an hour in June, compared with a year earlier, according to Labor Department data. That exceeded the 2% growth for the same period in wages for similar jobs in the private sector overall, including restaurants. The number of employees in limited-service restaurant jobs rose 3.7% in June from a year earlier, outpacing the 2.5% growth in total private-sector jobs.

Chipotle plans to promote next month's career day with an advertising campaign starting Monday on social-media websites and music-streaming service Pandora. It plans to open its nearly 1,900 restaurants three hours earlier than usual on Sept. 9, interviewing candidates until customers start walking in at 11 a.m. in each time zone. Some of the new workers will be hired to staff the about 200 new restaurants Chipotle plans to open this year, but the majority will fill openings at existing restaurants.

Chipotle typically pays starting employees just over $10 an hour. But its hiring push comes as the chain faces at least nine lawsuits in state and federal courts from workers who claim that it failed to pay them for working overtime, something the company denies.

Lawyers say overtime lawsuits like the ones against Chipotle are common in the restaurant industry, but they are a relatively new development at the company. Most of the suits were filed last year.

In another case, pending in U.S. District Court for the Southern District of New York, two former employees who were considered "apprentices" are challenging their exemption from earning overtime pay. They allege that because they performed duties similar to hourly crew members, they shouldn't have been classified as salaried employees. The plaintiffs claim they and other apprentices routinely worked more than 40 hours a week. Classified as salaried employees, they weren't entitled to overtime pay.

Chipotle denies that the plaintiffs were misclassified or are due overtime pay.

Mr. Moran said the lawsuits are baseless and Chipotle is contesting them. "We care deeply about our people and try to do the right thing," he said. "If we do something wrong, we fix it."

To attract employees, the company this spring posted videos on its website explaining how hourly workers can rise to become "apprentices" earning $53,000 a year and "restaurateurs," an elite level of management earning $133,000 annually. Restaurateurs are rare in the Chipotle system, with only about 400 now working in its restaurants. Their duties are the same as those of other general managers, but company officers bestow the title on those who oversee top-performing teams of workers.

A footnote on Chipotle's website says that the compensation figures are for "illustrative purposes only," but Mr. Moran said those are the average salaries.

Data published on career site Glassdoor.com, which relies on salary information supplied anonymously by employees, suggests wages at Chipotle are lower than the company claims and in line with McDonald's wages. But Mr. Moran says the Glassdoor data is inaccurate.

The Denver-based company has long touted its "people culture," and says 95% of its managers are promoted from its ranks of hourly workers.

It still faces difficulty recruiting workers, however. Chipotle's Mr. Moran said that's partly because it is more selective than other employers, limiting its hiring to people who demonstrate 13 traits, including curiosity, ambition and honesty.

The tight labor market hasn't had a significant impact on customer service at the fast-growing chain, according to company and independent data. Although wait times tend to be longer at Chipotle than at competitors, customers rate their overall experience at Chipotle higher, according to consulting firm Technomic Inc.

Over the past three years, on average, 50% of Chipotle customers have rated its speed of service on their most recent visit as "very good." That compares with 53% for the overall fast-casual restaurant category that includes Chipotle and 52% for fast-food outlets, Technomic said.

Write to Julie Jargon at julie.jargon@wsj.com

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(END) Dow Jones Newswires

August 23, 2015 21:45 ET (01:45 GMT)

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