Outside Insights | February 2015 | By Guest Author

Three Lessons in Charitable Giving from Shake Shack

Shake Shack’s huge IPO wasn’t just the result of its quality product and business savvy. The brand’s generosity also fuels its success.
Burger chain Shake Shack sees phenomenal growth from commitment to product and charity.
image used with permission.

No doubt you’ve heard about Shake Shack’s successful IPO and its $1.7 billion valuation. The burger stand that started in New York’s Madison Square Park and now has locations in places like Moscow, Istanbul, and Dubai has had a very big year.

What you may not have heard is the equally big news the nonprofit Share Our Strength had because of Shake Shack’s IPO. The chain’s founder, Danny Meyer, has been on the Share Our Strength board for 20 years and has held many successful fundraisers to support the charity’s “No Kid Hungry” campaign. But the biggest donation to date came from someone who believes in both Meyer and the anti-hunger nonprofit. Writing in The Huffington Post, Share Our Strength founder Bill Shore announced that an anonymous donor had given the nonprofit $1 million worth of stock in Meyer’s company.

“It was the investor’s belief that its value could increase in ways that represent a greater return on investment than much of the fundraising we do,” Shore wrote. That donor was right. Shares of SHAK are trading in the $40 range, well ahead of the IPO price of $21.

Shake Shack’s success is a win for both Meyer and Shore. Meyer opened the first Shake Shack with hopes of creating “community wealth.” Shore is committed to redistributing wealth to those who don’t benefit from a successful IPO or a stock market that’s tripled since the Great Recession.

The special partnership between Shake Shack and Share Our Strength has some powerful lessons for other quick-serve restaurants that want to mix business with charity.

1. Start with the GOOD in mind

“Our vision was for Shake Shack to be a ‘community wealth venture,’” Meyer wrote of the initial idea for the brand. “We would raise the money philanthropically to build the kiosk, then we’d gift it to the park, which would in turn become our landlord.” The money generated would provide “funding for the park’s robust budget for ongoing maintenance, horticulture, and public programming.”

It’s never too late to think anew about the type of impact your business can have in the world, and to connect profit with purpose.

Shake Shack’s cause connection with the park had an interesting result. The Shake Shack logo was designed by the same graphic designer who managed the branding for the nonprofit park. The logo now seen around the world was part of a pro bono design to ensure a new burger stand wouldn’t clash with the park’s brand.

While not every restaurant has social good baked in from the start, it’s never too late to think anew about the type of impact your business can have in the world, and to connect profit with purpose. The key is to get started with good. Do it for yourself, for your employees and for your customers. They are waiting for and expecting you to take a stand.

2. Aim for 1-1-1

As Shore points out in his Huffington Post piece, Shake Shack’s charitable work is not unlike the 1-1-1 model advocated by Salesforce.com honcho Marc Benioff. He advocates that 1 percent each of funds, time, and equity go to nonprofit organizations. The result of 1-1-1 at companies like Salesforce.com, Google, Yelp, and Zynga are comprehensive, impactful charitable programs that are as transformative to the businesses as they are to the nonprofits they support.  

Another excellent example of 1-1-1 at work in the restaurant world is Chili’s fundraising efforts for St. Jude Children’s Research Hospital. Since 2006, Chili’s has raised more than $50 million for St. Jude. Chili’s fundraisers include a day in September when the chain’s 1,500 locations donate 100 percent of profits up to $100,000 to the hospital. Chili’s employees from across the country also visit St. Jude in Memphis, Tennessee, to host a cookout for hospital patients and their families.

3. Leverage your biggest asset

Corporate giving is at a historic low of well under 1 percent of net profits. But restaurants can change that by raising more money from customers than they could ever donate from the company checkbook. The proof is in Shake Shack’s cake-themed shakes, which have been a big reason for the success of the chain’s annual fundraiser for Share Our Strength.

With just nine locations participating in 2013, Shake Shack raised nearly $300,000 for “No Kid Hungry” with its “Great American Shake Sale.” One New York location raised more than $45,000. In exchange for a $2 donation, customers received a free shake valued at $5. Shake Shack gave away 75,000 shakes.

Restaurants should involve customers early and often in their charitable giving. It’s a win for the business, the nonprofit, and the customer. 

Joe Waters helps do-gooders, nonprofits, and businesses to create win-win partnerships that raise money, build stakeholder loyalty, and change the world. He blogs at Selfishgiving.com.

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