Why Shake Shack is Still Thinking Big While Acting Small

Madison Square Park Shake Shack | William Brinson

Madison Square Park Shake Shack | William Brinson

When Danny Meyer’s Shake Shack went public in the beginning of last year, the company outperformed the restaurant industry. The brand had a monster IPO event with its shares more than doubling within the first month of the stock being on the market.

Skeptics were quick to say that there was no way this kind of success would continue and that consumer’s love of the better-burger segment would be fleeting.

Fast forward to 2016, the fast casual burger sector has yet to reach its full potential. With new burger concepts flooding the marketplace every day.

Shake Shack reported a 14% stock decrease in the latest company’s Q2 earnings report. Although, the company’s net income tripled compared to the same quarter in 2015 and the same-store sales also saw an impressive 4.5% growth from the previous quarter, there was still a 13% decrease from the same period of 2015.

“For the second quarter, we increased revenue over 2015 by 37.2%, opened four new company-operated Shacks domestically, three licensed Shacks and grew comps by 4.5%, on top of an impressive 12.9% increase last year. We continue to execute on our growth strategy, while delivering industry-leading AUVs and, in this past quarter, our 30.8% Shack-level operating profit margin set a new record. Innovating around our core menu continues to be a key driver of our success with the addition of our Chick’n Shack, launched in January, and our most recent LTO, the Bacon Cheddar Shack, launched in June,” said Randy Garutti, Chief Executive Officer of Shake Shack in a press release.

Financial experts have criticized the brand’s growth rate with only opening 100 stores in 12 years, but the burger chain has consistently stated that it will not be expanding for the sake of expanding.

Shake Shack's RSMI Overall Score

RSMI's Overall Score is based on five tracking categories including Sentiment, Influence, Engagement, LBA, and Mobile Engagement and the max score is 500.

Instead, Shake Shack is not cutting corners and is focusing on opening stores that fit their high standards.

Not to mention, the brand just landed at no. 7 in Foodable's Most Loved Brands report and we have seen the brand's RSMI overall score gradually increase with it's 2016 second quarter score being the highest it has ever been. 

We decided to do a follow-up with Shake Shack and sat down with Adam Shapiro, the Marketing and Community Manager at the better-burger concept and about what the brand thinks works for them in terms of marketing, growth, and the recent challenges the company has faced.  

A Fine-Dining Approach at a Fast Casual Price Point

Foodable: There are a lot of new better-burger players in the market. How is Shake Shack staying competitive?

Shake Shack: Shake Shack brings the ethos of a hospitality-driven, community-minded, fine-dining restaurant group to the all-accessible plane of quick-serve burgers and fries without gussying up the experience. By offering unusually great quality and hospitality at an unusually good value, Shake Shack allows its guests to enjoy a high-quality meal without having to break the bank to do so. 

Foodable: What has been the focus of the brand's marketing efforts?

Chick'n Shack and ShackBurger | Shake Shake/Evan Sung

Chick'n Shack and ShackBurger | Shake Shake/Evan Sung

Shake Shack: We’re all about our ‘hood! Community is at the core of Shake Shack, and the marketing team and local Shack teams are incredibly dedicated to ensuring that Shake Shack plays an active role and proves a vibrant addition to every community we enter. 

In every neighborhood we’ve opened in, from the Upper West Side of New York to West Hollywood in California, we work to develop deep ties to the community, become a part of the dialogue, and work with charity organizations, community centers, and local neighborhood partners. 

Foodable: What's the chain's growth plan?

Shake Shack: We expect to open at 18 domestic company-operated Shacks for 2017. Shake Shack seeks locations in thriving, bustling communities near-key business drivers like parks, schools and residential/commercial hubs.

Staying True to the Idea “the bigger we get, the smaller we need to act.”

Foodable: What have been some of the challenges in expanding the brand?

Shake Shack: Our biggest challenge is to continue to challenge ourselves: to hire the warmest and most caring individuals, to serve great food paired with incredible hospitality, to never compromise on quality or ingredients, to constantly better our operations. Every business decision we make will always be driven by the beautifully simple (yet essential) idea that “the bigger we get, the smaller we need to act.”

Foodable: What are today's consumers looking for in their dining options? And how does Shake Shack continue to attract them?

Madison Square Park Store | Shake Shack

Madison Square Park Store | Shake Shack

Shake Shack: We think people connect with our mission to “Stand for Something Good,” which resonates throughout every aspect of our business – ingredients, hiring practices, environmental responsibility, design and community investment, to name a few.

We also think guests love the sense of community we strive to create and nurture everywhere we open. There is an incredible spirit to this brand that lives in our passionate and friendly team, in our guests and in the surrounding neighborhoods in which we’ve made our home. We also try to maintain a sense of humor in everything we do, and we refuse to allow our growth to compromise our core values in any way.    

Foodable: Shake Shack just landed on Foodable's Top 10 Most Loved Brands list, a list ranked off of positive sentiment on social. How does the brand foster positive interactions on social media?

Shake Shack: Woo! So great to hear. We always try to make our fans a part of our storytelling experience by posting user generated content and by interacting directly with fans who engage with us.