Executive Insights | April 2012 | By Blair Chancey

You Can’t Stop Shake Shack

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Randy Garutti works with the team at Shake Shack in Brooklyn.
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One organization the brand can’t stop saying “yes” to, however, is anti-hunger nonprofit Share Our Strength. The organization works to feed the nearly 17 million U.S. children that go hungry each year, with the goal of ending childhood hunger across the country by the year 2015. Not only do 5 percent of sales from a special concrete, Shake Shack’s "Washington Monu-mint," go straight to the organization, but Meyer also sits on the nonprofit’s board of directors.

“We believe that childhood hunger is so connected to our business,” Garutti says, “and we want to be a part of helping support that, especially in urban communities where we’re located.”

Part of that support will come in May when the company launches a “huge” effort that allows customers to donate directly to Share Our Strength and receive a coupon for a special shake.

In addition to supporting charitable efforts such as Share Our Strength, Shake Shack will also say “yes” to several new locations this year. There will be a Shake Shack opening in Grand Central Terminal (a hotly debated expansion among jaded commuters concerned about lines) and in Center City in nearby Philadelphia. Unfortunately, Boston bloggers who maintain that the company is continuously snubbing Bean Town over other expansion locales will have to continue to wait. According to Garutti: “There’s nothing official to announce.”

Most importantly, the company watches for the perfect locations in “diverse, vibrant communities” to guide its expansion.

Garutti says he also watches other brands within the quick-service segment, including Chipotle and Panera, but does not consider his company part of the “better burger arms race.”

“It’s being led by two great brands, Smashburger and Five Guys,” he says. “We love their concepts, we think they do fabulous things, but we’re different than that. We’re on the outside of that, because our goal isn’t to franchise domestically. Our goal is not to do hundreds a year. That would dilute what we do.”

While Garutti admits that all three brands offer foods with similar calorie counts and should be eaten sparingly, he maintains the quality of Shake Shack burgers is an important factor that sets it apart from would-be competitors.

“Instead of eating a burger that came from trimmings of trimmings from seven countries, we know exactly where our burger came from, the exact cattle,” he says.

The authenticity of the brand, specifically its experience and its menu items, has been the root of Shake Shack’s success to date, and maintaining that will be the company’s biggest challenge going forward. The quick-serve industry is littered with brands whose expansion efforts have eventually commoditized the brand and led to stagnation, but Garutti says he’s keeping a close watch for such threats.

“If we continue to do all the things we’ve discussed, there’s going to be room for us to grow,” he says with a twinkle in his eye. “They can do what they’re doing, and we can do what we’re doing.”


Quick Hits

Shake Shack CEO Randy Garutti tells it like it is.

Why does the company have such a strong Asian following?

The Far East loves brands and burgers, and they love design.

How do you create unique shakes for each store?

We just do it on our own taste buds.

How did you get the First Lady at Shake Shack?

She just showed up.

What menu item hasn’t worked?

We actually did breakfast when we only had one location.

How many burgers do you sell a day?

A lot.

How did you finance your first expansion in the middle of the financial crisis?

With some debt and with some friends and family investors.

Are you contributing to the obesity epidemic?

Our caloric information is very similar to the other burgers out there.

What makes the fries taste so good?

We use crinkle-cut Yukon potatoes.

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