Special Report | June 2010 | By Robin Van Tan

5 Tips from Shake Shack

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Though expansion can be tough in the quick-serve restaurant market, the end resu
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Tip #2: Quality Wins

Shake Shack is known for its Black Angus burgers, Vienna all-beef Chicago-style hot dogs, and custard made from premium ice cream. So providing the same product at the same quality in locations like Miami or Kuwait presented an immediate challenge.

“Expansion issues always will include procurement and supply of products,” Garutti says. “Each time we know we want to grow, we’ll sit down with our vendor and say, ‘We want to grow in this fashion. Are you ready to grow with us?’”

When working with its vendors isn’t possible, Shake Shack explores outside options.

“We’ve had to spend a lot of time making sure we source the products from the right purveyors in Miami, or if it was shipped from somewhere else that it wouldn’t lose any of the quality we have,” Swinghamer says. Throughout the process, he works diligently to ensure new vendors are as passionate about quality as Shake Shack and its original vendors are.

“It’s really doing whatever it takes to make sure it happens, even if it means financially in the short run it’s not as advantageous,” Swinghamer says. “It’s understanding that, in the long run, quality wins.”

Tip #3: Connect with the Community

“A common mistake many restaurants make when they expand is to jump around from state to state during expansion,” Peterson says. “This can really hurt them in buying power, product availability, and brand recognition.” Any one of those factors can hurt a concept, but together they can lead to failure. That’s why Shake Shack is extremely careful in its decision to enter new markets.

“We focus first on really understanding it,” Swinghamer says. “We look for a really prime site where we believe that our guests will feel like it’s very identifiable, where we can really express the Shake Shack brand through its architecture and design.”

After researching the market and selecting a site for a future store, Shake Shack then opens up a dialogue with the community.

Take a location in the Manhattan neighborhood of Nolita, for example, where a few outspoken locals started protesting the store’s opening. After a couple of meetings with the community, Shake Shack decided not to proceed with the Nolita plans.

“We looked at that situation and said, ‘That’s not something we have to fight against,’” Garutti says. “We want them to be thrilled they’re getting one, and obviously that’s not the case here. There are plenty of other places to go, so why would we go to this site?”

Another key part of the dialogue involves an exploration of how Shake Shack can “regionalize” each store, both through creative architecture inspired by the surroundings and through special menu offerings.

“We look for a really prime site where we believe that our guests will feel like it’s very identifiable, where we can really express the Shake Shack brand through its architecture and design.”

“We do it mostly through our custard flavors,” Garutti says. “The mix-ins in our concretes”—dense milkshake-like creations blended with different toppings—“are often related to the neighborhood.” The Miami store’s menu, for example, will offer a concrete with key lime pie from a nearby bakery in it. Local beers or specials also help integrate the store into the community.

“By bringing in some of that local flavor and regional appeal, I think people feel much more comfortable,” Technomic’s Tristano says. “They don’t feel they’re at a restaurant that’s the same everywhere. … It creates something that’s unique that you can’t get anywhere else.”

Tip #4: Communicate Core Values

Despite slight tweaks to the menu and store design at each location, Shake Shack executives want to keep the brand as consistent as possible as it expands.

That’s why the director of operations for Miami spent two months training at the original location in Madison Square Park before he could set foot in his own store. His entire management team also was required to spend between two and four weeks working at the first location.

“If you’re a manager working anywhere for us, you have to go spend some time in the original Shack to understand it,” Garutti says. “That allows you to take the foundation of what we do and translate it to where you are.”

Tristano says the strategy is one that any concept could—and should—use to stay focused on where its success came from.

“It’s important to get a flavor of what it’s all about from the original,” he says. “You could go to Prague and see a mini Eiffel Tower, but until you go to Paris, you haven’t seen the real thing.”