The New York Times has a story about a few fast food restaurants that pay their workers above the minimum wage. Higher compensation means these restaurants can better compete for the best workers:

Scott Newman, the restaurant’s manager, said that Boloco’s above-average pay enabled him to pick from among many talented job applicants, adding, “When you teach talented individuals, once they get it, they’ll be a rock star for you.”

But,

When the company raised its minimum pay to $8, “that was an immediate hit to the P.& L.,” Mr. Pepper acknowledged, referring to the company’s profit and loss statement. . . .

Zeynep Ton, a professor at the M.I.T. Sloan School of Management, said many companies did not pay their employees well because they had a short-term focus on maximizing profits.

Still, even Professor Ton, who wrote a book about how companies should provide higher wages, acknowledges,

“It’s not easy to create a business where you pay your employees well and have low prices and generate great profits,” said Ms. Ton, author of “The Good Jobs Strategy.” “You have to get a lot of things right. You have to have continuous improvement and an excellent mind-set. Achieving excellence is always harder than achieving mediocrity.”

You also have to have a location and business model that support higher wages. Expecting higher minimum wages to work out for all firms just because it works for a few (as a differentiation strategy) is not realistic.

Scott DeFife, an executive vice president at the National Restaurant Association, said it was inappropriate to compare restaurants like Boloco and Shake Shack with chains like McDonald’s and Subway.

“The price point and convenience factor are more appropriately compared to casual table restaurants that have wait staff,” Mr. DeFife said. . . .

Mr. DeFife noted that restaurants paying higher wages tended to be in places where consumers were willing to pay more for their meals. . . .

The founders of the well-paying restaurant chains often point to Costco as a model, saying that it has found a formula to thrive even though it pays its workers well. Like Costco, they have all sought a way to single themselves out — Boloco emphasizes fresh, healthy food; Shake Shack, high-quality burgers; and In-N-Out, superquick service.

On the Costco point, Megan McArdle has explained why Walmart and Costco don’t pay the same, here and here:

We tend to look at the most politically salient features of the stores where we shop: their size, their location, the wages that we pay. But these operations are not so simple. They are incredibly complex machines, and you can no more change one simple feature than you can pull out your car’s fuel injection system and replace it with the carburetor from a 1964 Bonneville.

That’s relevant for the cases in the NYT story as well.