Shake Shack announced Monday it plans to reach at least 1,500 company-operated restaurants in the next several years, more than quadrupling its current footprint.
The fast casual currently has roughly 330 corporate restaurants in the U.S. In 2015, when the brand went public, it had 31 company-owned stores and set a target of 450 company-owned units—a mark it should reach within the next few years.
The chain opened 76 restaurants systemwide in 2024, comprising 43 company-operated restaurants and 33 licensed stores. This year, Shake Shack expects 80 to 85 openings across the footprint, including 45 corporate restaurants.
Much of the growth has been fueled by Shake Shack’s entrance into suburban markets. These drive-thru restaurants were expensive to build out of the gate, but the fast casual was able to reduce net build cost from an average of $2.6 million in 2023 to $2.4 million in 2024 and a projected $2.2 million in 2025. The chain is also exploring new, smaller footprints to fit into real estate it previously didn’t have access to.
“There are so many amazing restaurants in our system,” CEO Rob Lynch said during a presentation at the ICR Conference in Orlando. “We’ve grown, we’ve evolved, we’ve changed, but we kept to our commitment to providing amazing returns on capital for our investors.”
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Shake Shack hit the necessary financial benchmarks to support its new unit goal.
At the time of the IPO, the company shot for AUV between $2.8 million and $3.2 million, restaurant-level profit margin between 18 percent and 22 percent, net build cost between $1.5 million and $2 million, and cash-on-cash returns between 30 percent and 33 percent. Today, Shake Shack sits at $4 million AUV, 21 percent profit margin, $2.2 million in net build cost, and more than 33 percent cash-on-cash returns.
In Q4, Shake Shack’s same-store sales rose 4.3 percent, and total revenue increased 15 percent to $329 million. Restaurant-level profit margin was 22.7 percent, 290 basis points higher year-over-year, and adjusted EBITDA was $46 million, a 48 percent jump compared to Q4 2023. Company-operated AUV was $4.1 million.
Over the next three years, the brand projects total revenue growth and systemwide unit growth in the low teens, at least 22 percent profit margin, and adjusted EBITDA growth in the low to mid-teens. The good news—Shake Shack is already achieving this pace.
“The 1,500 number isn’t going to happen in the next three years, but we’re really confident about our ability to deliver these long-range guides over these next upcoming three years,” Lynch said. “The reason why we have so much confidence is because we have a playbook. And it’s not rocket science. It’s not some new AI technology. It’s a lot of fundamental things that we’re working on that are going to give us what we need to be successful.”
Lynch said the biggest barrier to achieving the 1,500-unit mark isn’t finding real estate, construction timelines, or supply chain capacity—it’s having enough qualified people to run them.
The CEO added that Shake Shack’s made-to-order and fresh food priority appeals to workers who want to be culinary leaders. He thinks demand will continue to grow as the company penetrates additional markets in a “much bigger way.”
“If we’re going to build 45 [company-operated stores] next year, we need 45 new people, including turnover, to go and run those Shake Shacks,” the CEO said. “And so that’s an increase of about 20 percent of that general manager population. The way we feel comfortable doing that is the way we’ve always done it. We’ve always put our team members first. We’ve always cared about the development of the people running our restaurants so they can take care of our team members and they can take care of our guests.”
The other hurdle is operations. Shake Shack is evolving how it manages restaurants to become faster. For instance, the chain uses a new labor model tool and scorecard that accurately measures operators on the same metrics across the board.
“So now, the folks that show up in the bottom know they’re there,” Lynch said. “And it’s not about rating them for being there. It’s about helping them understand what’s different about what they’re doing from the people at the top so we can continuously improve and make all of our Shake Shacks the best in the system.”
Also, up until a year ago, the fast casual didn’t measure speed of service. Today, the brand is “maniacally focused” on it, Lynch said. The improvements will be crucial as the brand dives more into suburban markets and the traditional drive-thru model.
Those upgrades will help profitability. So will driving same-store sales with strategic culinary innovation and core menu adjustments like combo meals, which should help with speed of service and the chain’s value proposition.
Shake Shack has also improved its digital footprint enough to efficiently target guests with surgical incentives that give them what they need and convince them to come back more often.
“We’re investing heavily in our tech stack to what Danny [Meyer] calls connecting the dots,” Lynch said. “Enlightened hospitality was all about connecting the dots, understanding your guests in a way that made them feel like they were the most important person in the restaurant. Well, we’re trying to do that from a digital standpoint. We’re connecting every channel so that when a guest comes in—whether it’s in our kiosks or our third-party delivery or our web or app—we know who they are, what they purchased, and how we can deliver what they need to get them to come back more often and spend more while there.”