CEO Randy Garutti spent two decades turning Shake Shack into what it is today—a place that beats traditional fast food in terms of quality and experience but also wins against casual dining when it comes to affordability. The executive said it’s “been a good home for us,” and he expects the fast casual will continue along that path.

That future will be without Garutti, however, who announced his retirement late last year. He will be replaced by former Papa Johns chief executive Rob Lynch. The new leader will be tasked with a growingly promotional environment as quick-service chains scramble to attract price-conscious consumers amid a tough economic period. Garutti emphasized Shake Shack must retain its premium brand position. And he means ingredients, hospitality, and designs—all of the things that separate it from fast food.

“There’s no question we’re living in, whether it’s us or the largest online companies who are all seeing a consumer who’s seeking value, a consumer who’s seeking discounts, in a lot of cases, promotions. You’ve seen a lot in our industry,” Garutti said during Shake Shack’s Q1 earnings call. ” … We want to give you something extra. We want you to feel the value. We want you to understand the quality of what you’re doing. So when we do things like our Chicken Sundays, that hits our channels. It hits our interior. You can come in and use those. So it’s not just digital. It’s omni-channel, truly. In-Shack, in our kiosks, in-Shack, app, web, and delivery. … Our learning is just so fast, furious, and fun. I mean, we’re really enjoying the process of opening up these budgets a little bit, trying some more things, to see what hits in our guests, see what hits regionally.”

Garutti also understands traditional fast food is always going to have its place in the market and that Shake Shack may not always get certain customers as often as those concepts do at their price point. But he believes in his chain’s value. That includes the testing of a new labor model allowing restaurants to adjust for format, menu, and channel mix, including kiosks. The strategy should be launched in all stores by the end of the year. Kiosks are now Shake Shack’s largest ordering channel and its most profitable. Average order values are at least a high teens percentage more than a traditional check thanks to recent digital enhancements that help with upselling.


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Shake Shack is battling tightening consumer wallets while still trying to inform the broader public on what it’s about. Garutti acknowledged the brand has punched above its weight class when it comes to recognition (being founded by widely popular restaurateur Danny Meyer, operating publicly for nine years, and growing rapidly certainly helps), but he also noted that many customers still don’t really know Shake Shack. The company materially increased its marketing investments this year to amplify its brand story. This will manifest itself via new packaging, in-store designs, creative campaigns, timely offers, and LTO launches. One example: Shake Shack brought back its Korean Chicken Sandwich after it became a fan-favorite in early 2021 and then also added a Korean Barbecue Burger, which was received well by guests.

“As we’ve said now for a little while, we’ve really been a brand that has done most of our work for 20 years on just being a great brand,” Garutti said. “And we’ve spent little to no advertising over those years, and it’s new for us to be ramping up. We’re super excited about the current marketing team at every level and how they’re interacting with the entire company to drive some really cool new things. And you’re seeing that progress happen this last year. And we fully expect to continue to double down on that.”

Garutti said marketing initiatives have proven successful in driving new and existing customers to the chain’s omni-channel ecosystem, whether that’s in-store, web, app, delivery, and most recently, drive-thru. To his point, Shake Shack has rattled off 13 straight quarters of positive same-store sales, including 1.6 percent growth in the first quarter. After a sluggish January, sales picked up in February and March. To begin Q2 in April, same-store sales lifted 4.9 percent with roughly flat traffic. The company also experienced its highest Q1 restaurant margin since 2019 at 19.5 percent and achieved a record-level Q1 adjusted EBITDA at $35.9 million.

In other words, Shake Shack has a proven playbook for the post-COVID era.

“We start everything with the education of who we are. Our brand pillars are really about helping people understand the quality of our ingredients that we’re cooking to order, that we’re spinning our shakes fresh by hand. These things are paramount,” Garutti said. “Then what we do is we think about whether it’s a promo or an afternoon shake opportunity or sometimes we’ll do free Fridays, whatever these things are, they’re all based in added value. They’re all based in ensuring that we continue to keep that brand positioning. I don’t expect you’re going to see us do a dollar menu type of promo. That’s just never been Shake Shack’s thing.”

Shake Shack finished Q1 with 525 restaurants globally, consisting of 338 in the U.S. and 187 internationally. The goal is to open roughly 80 stores systemwide in 2024. Half of that will be company-operated locations, which will be built at an average cost 10 percent lower than 2023. The brand is setting itself up to lower build-out expenses even further in 2025.

“This has been a strong company for decades,” Garutti said. “We have sustained, and we talked about that [during the Q1 earnings call] on purpose to say, many, many quarters in a row of sustained improvement in our margins, along with our sales, along with our cash flow as a company. All of that is just in the right direction with strength. I fully expect Rob’s going to get in and decide how he wants to take it, but I think we’ve got a great team that has a firm strategic plan for ’24 and already eyes on the strong pipeline for ’25.”

Fast Casual, Finance, Growth, Story, Shake Shack