As Shake Shack's (SHAK, Financial) business thrives, CEO Randy Garutti is going all in internationally – Kuwait, Qatar, Saudi Arabia, London, Tokyo and Wales – that could take the company to higher heights.
At Shake Shack Garutti and his team have been busy getting the company into various formats including flagship, urban, suburban, outlet mall, path side and inline locations. Menu innovation is key such as launching Chicken Shack, removing the burger LTO, entering new markets and antibiotic free chicken.
It’s the future of the company that excites Garutti and the other executives, a future of opening in new markets, taking advantage of brand strength and becoming more efficient operationally. Shake Shack's CEO is the kind of guy who is completely focused on strategy. For him it's all about deeper connections and engagement; he's focused on engagement around the world.
After seeing sales grow 11% in the fourth quarter, Garutti still has the goal of focusing on the long term and a focus on customer feedback to help create top selling menu items.
“On the menu innovation side of our business, our new Chicken Sandwich which launched exclusively in our three Brooklyn Shacks in July, has shown strong early results during the operational testing phase," Garutti said. "Guest feedback has been overwhelmingly positive and it has become one of our top-selling items on the menu at all food Shacks."
Jeff Uttz, chief financial officer and executive vice president, sees Shake Shack's brand awareness and new menu items only making them stronger
"Our strong growth from the third quarter was positively impacted by the factors Randy noted earlier, including increased brand awareness from the IPO, return of crinkle cut fries," Uttz said. "And a positive mix shift from many invasion including the Roadside Shack and our Shake of the Week and many price increases approximately 3% taken in early September 2014, which we have now rolled over another 3% taken in January 2015 to offset commodity cost pressures."
But there’s another side of Garutti – and that’s Garutti the CEO who is not afraid to think small while still focusing on the bigger picture. Garutti is not afraid to focus and hone in small, regional markets. Since taking on the role of CEO, Garutti has brought the company outside New York into new markets. Garutti is building upon his already fantastic team. He's listened to customers, increased the company's western footprint, capitalized on real estate opportunities and opened up more company-owned shacks.
He has also challenged the entire company to take the brand even further. In 2015 Shake Shack introduced a new cheeseburger topped with bacon and beer caramelized onions as well as a Shake of the Week. It's not afraid to scrap plans or disrupt itself, closing their flagship Madison Square Park Shack for renovations from October 2014 through May of 2015.
BurgerFi today considers Shake Shack its top competitor. But so do Five Guys Burgers, Smashburger, In-N-Out Burger, Bareburger and a long list of smaller burger joints.
“Shake Shack is always taking care of our team, and competitively wages to attract and keep a sincere hospitable and high performance team," Garutti said. "We’ll continue to take the high road and offer completive wage packages, while focusing on growing revenue and attracting the best talents in our company. What we do takes as talented human beings, it takes able hands and full hearts. And we remain committed to delivering the genuine hospitality to our guests have come to respect from us."
Shake Shack continues to build upon and strengthen its success. It has seen an 8.1% increase in traffic, with revenue topping $190 million in 2015. Shake Shack's cash is growing, too. The company is now sitting on $70 million in cash compared to just over $2 million at the end of 2014, allowing Garutti to continuously expand their location count.
"Average weekly sales for domestic company operated Shacks increased 9.6% to $103,000 for the third quarter of 2015, up from $94,000 in the same quarter of last year primarily driven by robust traffic trends, menu price increases," Uttz said. "Positive shifts in mix from menu innovation and solid performance across the Shack base including the new markets."
Garutti and his team have figured how to hook the customer and keep them coming back for more. New and exciting products have been key. The company has also had a lot of hype and excitement around it. But now Garutti and his team are using innovative menu items to keep that excitement going. In 2015 the company featured the ShackMeister Burger as well as a custard calendar change. Management attributes its strong brand awareness and influx of new customers to its IPO. It has executed well on its strategy to cluster growth in existing markets. It has used the power of its brand to get premium locations in locations across the country.
"Our recent Instagram post, announcing the launch of the ChickenShack at our three Brooklyn Shacks, received nearly 7,500 likes. The most we've ever received on a single posts, which just speaks of the active engagement we have with our guests and their desire to share their Shack experiences with their own communities. This has been an amazing part of the Shake Shack story, since we were born in 2004. It continues to demonstrate the sincere and organic nature, with which we connect with our fans," Garutti said.
