Shake Shack opened 49 restaurants last year, with seven new areas in the mix, including Columbus, Ohio; New Orleans; and Salt Lake City. In the past four years, Shake Shack appreciated 41 percent compound annual growth rate, going from 44 to 173 U.S. restaurants (10 domestic units are licensed, a rise from just two the previous year).
Shake Shack’s total revenue lifted from $191 million to $567 million in that span. Total systemwide sales rose to $839 million from $295 million and cash flow from operations hiked from $41 million to $96 million.
To dress it down, what we’re seeing now is one of the quick-service industry’s fastest-growing systems start to mature. And that’s something competitors should take notice of.
Just from Shake Shack’s perspective, the store evolution inspires better-run restaurants throughout the organization. There’s a parallel focus now between tweaking designs to match consumer and market demographics and simply opening more units.
In some respects, real-estate agility that mirrors Starbucks’s path to coast-to-coast growth (Shake Shack has no intention of getting this big, though).
In 2019, Shake Shack built across a mix of formats, evaluated others, added a number of premium food courts, and expanded in outlet malls. This coming year, as well as 2021, expect to see Shake Shack grow via urban, freestanding pads, shopping lifestyle centers, and test several other options along the way, including smaller-footprint designs that increasingly integrate digital ordering and an improved pickup experience.
You can see this model unfold today in Shake Shack’s original and most established center—New York City. The Big Apple holds that claim from an awareness standpoint, at least, despite the fact eighty-five percent of the brand’s units are located outside NYC.
Shake Shack renovated a Theater District location last year, one of its busiest, and planned to do the same for units on the Upper West Side and Grand Central Station. Why mess with a working model? Because Shake Shack has the brand equity in NYC to think a step ahead of day-to-day survival. These restaurants are being updated to improve layout and ensure optimal flow from multiple ordering channels, like delivery. Kitchen equipment is being upgraded to maximize throughput. Kiosks added to further convenience elements—an important note for a brand that doesn’t always compete on ticket times with some of fast-food’s biggest players.
Shake Shack’s design is evolving for the digital journey, the company said at ICR. Its digital and in-store experiences are converging. For Shake Shack, this means front-of-house flow increasingly separating order-ahead channels. Again, more kiosks. And the noted iterative design and renovation process unfurling in NYC.