Rob Lynch, naturally, was familiar with Shake Shack’s origins, performance, and compelling growth as a competitive onlooker during his time as CEO of Papa Johns, as well as prior stops from Arby’s to Taco Bell. But what initially drew him to the fast casual’s top post—succeeding Randy Garutti, who retired after 20-plus years—was it simply makes his favorite burger on the planet.

“I mean, it’s literally the best burger, fries, shake, drink you can get,” Lynch said Thursday during his first earnings call with the brand.

Lynch also recognized his pull to the brand wasn’t all that different than customers. Shake Shack does not—and historically never has—faced challenges driving trial. During a time when $5 value meals have reigned amid inflation and guest pullback, Shake Shack has done far more than survive and hold fort. The chain reported same-store sales growth of 4 percent in Q2 (price/mix of 4.8 percent and negative traffic of 0.8 percent), marking its 14^th consecutive period of gains. Notably, unit-level margin rose 100 basis points to 22 percent—the highest number since 2019. Adjusted EBITDA of $47.2 million (27.4 percent higher, year-over-year) was the loftiest result in Shake Shack history. Revenue expanded 16.4 percent to $316.5 million and the brand generated $20.6 million in free cash flow. That, too, was a water mark for the company.

What these results illustrated, Lynch said, was Shake Shack’s positioning as a premium brand didn’t turn out to be the liability some might have assumed. Rather, as CFO Katie Fogertey put it, “I think the last four or five months have shown that value isn’t just about price. It’s about the benefits that you offer to your guests at a fair price.”

Within this conversation, however, resides the potential Lynch laid out Thursday for Shake Shack.

While pizza is its own category in many respects (it’s more like an ecommerce business, where guests shop deals, than a dine-in restaurant), the quick-service sector can often be described as an impulse arena. People drive down the road and make a split decision on where they’re going to stop within a minute of executing that transaction, Lynch said.

Shake Shack today sits somewhere in the middle. It’s a destination or special-occasion concept. Customers plan ahead. It helps explain why Shake Shack has felt insulated during this value rush. Guests know what they’re getting into, and why, before they walk through the door or pull up to the window. There isn’t any sticker shock.

“That being said,” Lynch noted, “I think we have the opportunity to play on both fronts. I think we have the opportunity to still be that special destination in this industry, but we can pick up a lot of volume by opening up our aperture to be more in line with some of the more traditional QSR impulse purchases.”

The task unfolding for Lynch is one of core equity balance and untapped whitespace. The reality is hyperinflation in quick service has narrowed that absolute price point between larger, more traditional players and fast casuals like Shake Shack. From that standpoint, the chain hasn’t had a difficult time conveying why its menu costs what it does.

Lynch said in his first 90 days he spent time in the field learning how to make burgers, hand-bread chicken, hand-spin custard shakes, and eating a lot crinkle cut fries. Those processes aren’t in danger of drifting. “This brand has been built on the best burgers in the business and making food that people are willing to stand in line for,” he said.

Where the true “value” runway stands, though, is with that final note. Speed of service at Shake Shack hasn’t always sat atop its whiteboard, to put it mildly. But it’s what limits the brand from evolving from destination to routine, Lynch said.

In June, Shake Shack hired Stephanie Sentell, most recently SVP of company operations at Inspire Brands, as its COO. Lynch knew Sentell going back a decade (her career spans Inspire/Arby’s and Dairy Queen before that).

He set her on the task of guarding Shake Shack’s standing while also reimagining its potential. Could it use equipment, technology, and operational processes to tackle throughput? That’s Sentell’s primary focus, Lynch said.

“We got to get our great food out faster,” he said. “And once we get those processes in place that allow for that, we’ll be able to really explore how we can get more efficient and effective with our labor.”

Lynch said he’s already earned an internal reputation as being the biggest “drive-thru pusher in Shake Shack.” He frames it as moving from a business that used to deliver against walk-up traffic to one that’s going to need to deliver against drive-up traffic.

As of March or so, Shake Shack had 30 drive-thrus. Unlike some other fast casuals, such as Chipotle, Shake Shack didn’t elect for the pickup lane format. Instead, it essentially created upscaled versions of traditional drive-thrus with speaker boxes. The first arrived on December 6, 2021, in Maple Grove, Minnesota, with a digital menuboard, two-lane ordering system, and separate pickup window. Additionally, there was a split-kitchen design with a separate space dedicated to drive-thru, with employees taking orders and payment at multiple points along the journey.

Since, Shake Shack has worked on ROI. It’s aimed to reduce buildout costs by 10 percent and set a goal to slim guest order times by roughly 30 seconds systemwide, and even more at the drive-thru. In Q4 total (not just drive-thru), ticket times at Shake Shack were about six to eight minutes.

Lynch said the truth is, Shake Shack hasn’t appreciated success at the drive-thru yet. He called the current times “exceedingly too long,” or about twice what they need to be.

There are multiple culprits. One, the menu on the drive-thru boards looks like the one in-store, Lynch said. There aren’t combos or options implemented at scale that can improve speed of ordering and reduce stress on the kitchen. Secondly, there aren’t standardized, linear lines across drive-thrus. So people are moving around and there are a lot of steps to get to the window.

“We execute pretty good accuracy,” Lynch continued. “The team does a great job making food fresh and making it right. We got to get faster, and we will. And once we get that unlock solved, we’ll have a lot more confidence building these things in a lot more markets.”

Given the current speed challenges, there has been some hesitance building drive-thrus. “That’s going to change,” Lynch said. “We’re going to focus on drive-thrus. Stephanie is going to help the team evolve our drive-thru strategy and it will be an unlock for us to get that [totally addressable market] where I think all of you expect us to go.”

If you spin around the industry, it’s clear why Lynch wants to refocus scope. About 10 percent of Shake Shack’s stores today are drive-thrus. Chipotle has lifted its mix to about a quarter, with 80 percent of go-forward growth expected to include a “Chipotlane.” Starbucks is over 70 percent.

Lynch said he isn’t sure there’s another brand with more upside opportunity on throughput than Shake Shack.

And again, it circles a larger vision. Lynch’s goal, he told investors, is to “scale this thing and really bring Shake Shack to every market across the globe.”

To do so will require understanding the nuances of how the brand shows up.

What you see today is Shake Shack has protection against some of the challenges other quick-serves face with the lower-income demographic since its profile skews the other side. “But we’re working to … broaden our brand to not be only for the highest-income burger eaters,” Lynch said.

Shake Shack is working to remove barriers to frequency, which is twofold: speed of service and the value perception.

There’s no plan to degrade experience or product quality, he reiterated. “But I do think there are opportunities for us to evolve our menu strategy, evolve our LTO strategy, evolve the way we approach how we position things across our revenue model and our menu to drive a better value perception,” Lynch said.

“I think those are the two things that are really going to help us to drive frequency,” he added. “So I don’t think it’s, hey, lower-income customers don’t want Shake Shack. They do. And, frankly, they show up and try it and they love it. But it becomes more of a special occasion I don’t want to be a special occasion. I want to be something that is a Friday night staple for the family; that is an after-work stop on the way home. And in order for those things to happen, we’ve got to work on our speed of service and we’ve got to work on our value perception.”

One area this is going to evolve is with loyalty. Lynch said Shake Shack in the process of building out a platform for the first time. The brand hasn’t really advertised all that much in general over its lifespan. It hasn’t needed to. Founder Danny Meyer’s reputation and Shake Shack’s aura, from NYC vibes to new builds, has generated enough heat to get customers interested.

Many quick-serves spend at least a mid-single digit percent of sales on advertising. Chipotle is closer to 3 percent. Shake Shack entered fiscal 2024 at about 1 percent and was starting to pilot higher-spend approaches in markets like the West Coast and Texas. And it wasn’t so much new-unit openings as one-to-one digital opportunities.

Lynch said if a brand spends a ton of marketing dollars to drive people to stores and the experience holistically isn’t the best it can be, “you’re probably not getting the same ROI on those marketing dollars.”

So the fact Shake Shack does get positive ROI with lower spend and longer wait times is encouraging when considering the future.

With loyalty in particular, Lynch oversaw Papa Johns’ growth from 12 million to about 30 million members. The quality of those user engagements and growth is what he’s looking to emulate. “… to be able to build a platform that has a capability that allows us to build one-to-one relationships with our guests,” he said.

It’s not going to be merely a discount vehicle. Shake Shack’s program will allow access to early product offerings, swag, and other relationship-building tools to drive lifetime value beyond coupon connecting.

Lynch has a long history in this universe. PR Week named him its 2017 Outstanding Marketer of the Year, and he was labeled the 2017 Content Marketer of the Year by Digiday and picked by AdAge as the 2015 Marketer of the Year.

Lynch helped direct Arby’s to its “Fast-Crafted” positioning and saw it post 16 consecutive quarters of same-store sales growth. He was the company’s CMO when the “We Have the Meats” campaign hit the sector.

At Shake Shack, Lynch said he’s developing a framework by answering three questions:

Who is our target audience? What is going to either increase or change their behavior? How do we efficiently and effectively reach them?

A snapshot of this in action:

Traffic for the brand was flat in April and May and lagged in June along with a slow-down in marketing. Traffic rebounded positive in July (comps of 4.1 percent) as messaging “came back full steam,” Lynch said.

He added Shake Shack will continue to lift marketing investments and drive awareness and trial as the company scales. “However,” he said, “I want to be clear it is not simply about spending more advertising dollars at the expense of profitability. We will ensure that our marketing investments continue to generate the same significant returns that they do today. Our profit objectives will not come at the expense of marketing spending for the sake of marketing.”

Fogertey echoed Lynch’s thoughts. Openings, she said, snake customers around corners and produce sales in the first couple of weeks “bigger than I’ve ever seen in any concept.”

Shake Shack’s job is to drive frequency, which it does through brand positioning and by creating a product calendar that brings “our best customers back more often,” she said.

However, “one of the biggest levers that we have to drive comps is not actually marketing at all,” Fogertey said. “It’s improving our speed of service and our throughput.”

She said the brand’s service times are still in the range of where it was in Shake Shack’s early days, when it was a New York concept and people expected crowds.

Lynch said speed of service wasn’t “necessarily a religion” at the company. It ranked behind product curation.

“As you move from all of your Shacks being in Manhattan and the New York City area where a lot of folks are walking up to the Shacks and they’re used to kind of waiting in line to get Shake Shack and we start to compete against other brands in other markets in Ohio and Georgia and Texas and all these other places,” Lynch said, “speed becomes something that is part of the overall guest experience and is a big part of that, especially as you move into more drive-thru formats. So we’ve really just kind of changed the way we think about it—it’s about holistic guest experience. Food quality, taste is part of that, enlightened hospitality and how we make the guests feel is part of that. The convenience, accessibility and speed are also part of the holistic guest experience. And we’re just kind of putting those up the ladder in the order of prioritization.”

Shake Shack opened 12 company-run units in the quarter, including three drive-thrus, as well as 11 licensed stores, to bring its systemwide total to 547 locations. About 80 (split evenly between corporate and licensed) restaurants are expected for 2024.

With all assets, Shake Shack has moved to a more standardized kitchen model in recent months. For a long time, every store was unique and ops teams had to figure out logistics by build. The chain was going into pieces of real estate that made streamlining difficult. Now, there are more standard formats for larger boxes with bigger sites, and scalable plans for smaller footprints as well.