In many ways, Shake Shack surged to restaurant stardom by appealing to customers who felt they didn’t belong in the traditional fast-food box. Launched by fine-dining luminary Danny Meyer, the brand took a modernist approach, with physical settings that spoke to millennials and encouraged a fresh generation of counter-service diners. Things like wood tables recycled from old bowling-alley lanes. Digital signs. Local food purveyors spotlighted on menus. A social media personality that strayed from typical fast-food ads.

One result—an intended byproduct—is that Shake Shack transformed into a gathering spot in those early days. Almost like Starbucks’ “third-place” positioning in burger form. To this day, convenience remains a back-burner goal, at least compared to big-box peers. Food takes a bit longer out of the kitchen. People linger. Dining rooms are often packed, especially in East Coast spots where Shake Shack spread from its cult-driven base.

This reality is hitting especially hard during COVID-19, CEO Randy Garutti said Thursday in a business update. The fact New York City remains front line to the unprecedented crisis isn’t aiding the cause, either (85 percent of the brand's units are based outside the Big Apple, but the highest-volume units are found there).

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Today, nine company-run Shake Shacks have temporarily closed entirely. The rest are relying solely on to-go and delivery orders, like the majority of still-open restaurants coast to coast.

Garutti said sales have been “severely impacted,” and the company is working to align operating costs to the best of its abilities. Over the last two weeks, as mandated shutdowns and stay-at home orders webbed across the country’s map, sales at Shake Shack took a dramatic plunge.

Compared to last year, excluding those shuttered restaurants, sales across its domestic corporate system are down between 50–90 percent, Garutti said. The average is 70 percent.

Also unlike many quick-service brands, Shake Shack is heavily corporate run. There are 275 units systemwide, with 163 of those representing U.S. company-operated locations (another 22 are domestic licensed stores, and 90 are international licensed venues).

“Shake Shack was born as a community gathering place in Madison Square Park in New York City,” Garutti said. “Around the globe, communities are being asked to temporarily do the exact opposite of the fundamental human need to gather with friends that we’ve built this company upon. While we expect to feel this impact for some time ahead, you can bet that when the day comes where friends, families, coworkers, travelers and everyone in our community chooses to gather again, Shake Shack will be the place they choose to do so.”

Same-store sales were down about 2 percent through the first two months of Q1, which follows a recent trend for Shake Shack. The chain’s comps declined 3.6 percent to close fiscal 2019, comprised of a 1.8 percent increase in price and 5.4 percent dip in traffic. Shake Shack credited the drag to a few factors. Namely, an ongoing transition to Grubhub as a sole delivery partner on a market-to-market basis (more on this later and how it’s not the case now). Exiting vendors—some with better awareness in certain areas—dragged results. The other factor was cannibalization stemming from a record development year where Shake Shack opened 39 domestic corporate stores—80 percent in existing markets. All 12 of the brand’s new company restaurants in Q4 were in DMAs where Shake Shack already operated.

Back to the present, Shake Shack said sales started to drop significantly in early March as the coronavirus fractured everyday life. The impact became more acute as the month progressed, resulting in March comps falling 29 percent compared to the year-ago period.

To the earlier point of design and site selection (Shake Shack is not a brand that appreciates 70 percent of its business via drive thru, like McDonald’s and Wendy’s), much of the chain’s footprint is heavily indexed toward high volume, urban, and premier shopping locations. So the dent, Shake Shack said, will continue to be sizable as long as stay-at-home orders remain in place.

From mid-March on, Shake Shacks that remained open were operating in a limited to-go or delivery model, with all dining rooms closed. Most units today don’t allow guests inside and have converted to curbside to-go service. Some have modified drive-up configurations to keep employees and guests safely distanced, the company added.