However, to get a sense of the full picture Fogertey took her skillset to, Shake Shack’s April performance was 15 percent lower than 2019 as suburban stores were flat. The brand hadn't quite yet recovered.
Meanwhile, an interesting dynamic was taking shape industry-wide.
By mid-May 2020, 25 of the largest public restaurant chains more than doubled aggregator cash holdings, from $9.4 billion pre-pandemic to nearly $20 billion, according to financial services company Rabobank. All of them carried more cash suddenly than pre-virus.
Shake Shack was definitely one of those. CEO Randy Garutti described the industry’s stock-piling as a “moment where no company was unsinkable.”
Shake Shack conducted an equity transaction and brought in a significant sum. The brand saw the convertible debt market reach “incredible opportunities,” Garruti said, and issue debt for $250 million at a zero percent coupon for seven years. As Garruti noted, “we may never see numbers like that in our lifetime.”
The result was Shake Shack fortressed its balance sheet in a way it never had before. Come May 2021, the brand had more than $400 million in cash. In Baird analyst David Tarantino’s words, it represented “probably more than [Shake Shack will] ever need to grow the business.”
Yet it was impossible for Tarantino, or any analyst for that matter, to guess just what Fogertey and Shake Shack had in store.
“They needed somebody who had a very strategic mindset,” Fogertey says of those early days on the job. “Having your classic CFO who might not be as strategic minded wasn’t going to do anybody any favors.”
Sure, Shake Shack could use more support and rigor in defining its finance function overall. But when Fogertey looked at the wider opportunity, there were ample places her forward-thinking vision could be levered at Shake Shack. She jumped into stores and spent weeks working with employees. “Getting to understand the company,” Fogertey says, “from soup to nuts.”
It was clear to Fogertey Shake Shack’s culture was its launch pad. “Thinking about the long-term growth trajectory, what we’re doing every day is not just providing great experiences,” she says. “We’re really building up our people from the ground up.”
We’ll get more into the labor side of Shake Shack later, but the operational transformation locked into place quickly. The brand’s omnichannel efforts predated COVID, as was the case for a plethora of quick-serves. However, the gravity of digital infrastructure was muted in comparison, to put it lightly. In addition to the chain’s heavy urban base, one of the reasons Shake Shack’s battle out the pandemic trough was so steep owed to many of its differentiators. The brand debuted as a social, hospitality-forward concept that encouraged guests to stick around. It wasn’t as transactional as some of its peers, or as streamlined across channels—core traits you might expect from a fast casual founded by a Michelin-starred restaurateur.
That urban drag coupled with a lack of drive-thrus plunged Shake Shack’s U.S. sales as much as 90 percent at some U.S. venues in the opening COVID weeks. The average of 70 percent felt closer to full-service counterparts than counter-service ones.