Shake Shack: Where Are They Now?

Last week, news broke that Shake Shack CEO, Randy Garutti is joining the Board of Directors for mobile point-of -sale company, Square. Previously focused on credit card payments, Square is expanding into employee management software with an emphasis on retail and hospitality, making Garutti a great addition to its board.What makes Garutti an asset for Square’s new hospitality direction? Well, first of all, Garutti has been in the hospitality industry since he was 13 years old, serving up bagels at a shop in New Jersey. Since then, he’s done everything from waiting tables to traveling abroad and studying different food cultures. He has a degree in hotel and restaurant management from Cornell University. But perhaps what is most impressive is the fact that Union Square CEO, Danny Meyer gave Garutti his stamp of approval after only a 45-minute-long chat about Garutti’s passion for the industry.

"I saw a guy with more enthusiasm in his little finger than most people have in their entire body, and he was oozing love for the restaurant business, especially fine dining restaurants," Meyer told The Street.

Garutti worked his way up to Director of Operations for Union Square after only five years with the company. In 2001, he helped Meyer launch a hot dog cart in New York City as part of an art exhibit in attempts to help revitalize the area. The team had no idea that it would later become Shake Shack, a fast casual burger company with more than 130 locations worldwide.

So how did this billion-dollar burger empire grow? After a few years, the hot dog cart in Madison Square Park had become so popular that when the city began taking bids for a permanent kiosk-style restaurant within the park, Meyer immediately began sketching his idea for the space on a paper napkin (which Garutti still has to this day.) It was around this time Meyer asked Garutti to take over the new company as CEO so he could focus on other facets of Union Square Hospitality. The first official Shake Shack opened as a permanent establishment in Madison Square Park in 2004 and is now the most iconic location for the brand.

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Danny Meyer sketched out the idea for Shake Shack on a napkin

Shake Shack

Shake Shack

One ‘issue’ with the first location was the increasingly long lines. To combat that issue, the Shake Shack team decided to open a second location in the Upper West Side of New York City. Instead of shortening lines, the second location actually increased brand awareness causing lines lengths to continue growing.

Overall, Shake Shack shows a slow growth model. The brand opened its first location outside of New York City in Miami in 2010; six years after the first. The next year, it became an international brand with the opening of locations in Dubai and Kuwait. In January 2015, Shake Shack went public with its IPO priced at $21 per share with 63 locations. Trading began at $47 per share and hit a high of $92.86 per share in May of that same year.

Foodable spoke to Garutti back in 2014 when Shake Shack had less than 40 locations. Since then, the core brand hasn’t changed aside from its size. Their dedication to ‘good food’ rings true as they boast 100% all-natural, humanely-raised Angus beef, 100% all-natural cage-free chicken and crinkle-cut Yukon potatoes, with zero artificial ingredients.

In that 2014 interview, Garutti told us one thing that governs Shake Shack’s growth:

“If we’re not getting better here, we’re not allowed to keep opening elsewhere.”

Garutti’s hard line has brought a culture similar to that of a fine dining restaurant into the brand’s DNA. Shake Shack opened 26 new stores this year and though that may seem slow in comparison to fast casual restaurants like Mod Pizza or Freshii, it is in line with the Shakes slow growth strategy.

Square is the fastest growing POS system in food service. What are they planning for the future? Could they be aiming for the casual dining sector? At-table payments? These are some of the questions many industry professionals are asking themselves. One this is for sure, Garutti's experience in multiple guest-experience restaurants makes him uniquely positioned to help Square dominate the point-of-sale market.

Foodable Reveals Five Star Awards, Celebrating Industry's Best

Foodable Reveals Five Star Awards, Celebrating Industry's Best

In the restaurant industry, accreditation is a powerful way to separate the who’s who: which chefs are worth the hype and which ones fall flat. It also brings to light which more obscure establishments are beaming with talent. In the past five years alone, restaurant reviews have changed significantly, with consumers in the driver’s seat, typing away their opinions on platforms like Yelp. There are few institutions, however, that take restaurant reviewing to a more serious level, where a rigid set of guidelines must be met in order to grant the restaurant any published review at all. Michelin is most notably one of them. But what if you took the same type of principles as the Michelin Guide — where a score is based on consistent factors across the board for each restaurant — and brought that into the land of social media, where the analysis of consumer sentiment, engagement and influence in relation to a restaurant determines the ultimate score of achievement?

Enter the Foodable Five Star Awards.

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The Better Burger Segment Ascends on Wall Street: Next Up is Danny Meyer's Shake Shack

Fast casual as a whole is the fastest growing segment in the restaurant industry. However, the better burger concepts within the segment are not only growing rapidly across the nation, but they expanding to Wall Street. The Habit Burger Grill went public at the end of 2014. Also in 2014, another gourmet burger success, Shake Shack alluded to an IPO event and it is now official with the brand filing for an initial public offering.

2014 was a big year for the better burger segment. This begs the question: was this just the beginning? or will 2015 be the year that the success of these concepts fizzle out? Nonetheless, Shake Shack is moving full speed ahead.

A Humble Beginning Backed By New York’s Greatest Restaurateur

The Shake Shack story starts in one of the best culinary cities in the world, New York City. You know those food carts on every block? From 2001-2003, Shake Shack was a hot dog stand in Madison Square Park . The concept was created by Danny Meyer’s Union Square Hospitality Group (USHG.) Meyer is a recipient of the James Beard Foundation’s Restaurateur and some of his concepts include Union Square Tavern, Gramercy Tavern, and Eleven Madison Park.

Back in the early 2000s, the lines of Shack fans for the cart were so long that someone even made a Shake Shack app that allowed the user to watch a live video feed of the line. After three summers of long lines, the USHG won a bid to open a permanent kiosk in the park. Ten years later, the brand has over 56 store locations worldwide in the US, UK, Turkey, Russia, and the Middle East. In 2013, the company brought in $82.5 million in sales.

The Concept

Like most gourmet burger joints, the food focus is on higher quality ingredients. This is primarily what sets them apart from the quick-serve burger moguls. The Shake Shack burger meat is 100% all-natural Angus Beef, with no hormones or antibiotics. The brand’s menu is simple with five or so burger options including the Shackburger, a cheeseburger topped with lettuce, tomato and their famous Shacksauce and the vegetarian Shroom burger, a crisp-fried portobello mushroom filled with melted muenster and cheddar cheeses, topped with lettuce, tomato and ShackSauce.

Besides the burger offerings– the brand serves hot dogs and crinkle cut fries. Their frozen custard features shakes, floats, and concretes. Each month a new frozen custard flavor is offered. The brand also serves their own ShackMeister Ale, Shack red wine and Shack White wine by Frog’s Leap– along with hand picked local brews and wines tailored for each location.

What the Future Holds

As a whole, gourmet burger concepts are outperforming in the category in terms of sales. So if you pair a better burger concept with the strategy of a successful restaurateur who really understands how to create a thriving restaurant– is the potential limitless?

The recent Habit Burger Grill IPO has probably created some pressure on the brand. However, Meyer is known for thoroughly thinking through his business decisions and being selective when hiring brand executives. It took him nine years to open his second restaurant success after his first. He learned from his father’s mistake, who was bankrupt from his hotel business by age 42.

Another factor that has attributed to the brand’s success is each store has a local focus and fits into the community. This is not done by accident. “It’s treating each Shake Shack as its own business. The bigger we get the smaller we need to act,” said Randy Garutti, CEO of Shake Shack

No one can truly predict what the future holds for Shake Shack and other better burger concepts. Skeptics are saying that the consumer’s love of the better burger joints are going to start fleeting and that after initial success in the marketplace, they will lose their appeal due to the soon to be overly crowded marketplace. Even with that in mind, 2015 may be the year that Shake Shack and gourmet burger joints conquer Wall Street.

Shake Shack CEO — How to Create an Iconic Brand

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In this episode of On Foodable, brought to you by the Foodable Network, we sit down with Shake Shack CEO Randy Garutti. After taking a look back at how the iconic brand got started, Randy tells us why the Shake Shack model connects so well to people from all different walks of life, making the brand a national success. He also gives us insight into how the Shake Shack team selects its real estate for new locations, and where you can expect to see Shake Shack popping up within the next year.