QSR April 2023

BRAND LEADERSHIP

in New York City and Miami. It then rolled nationwide as part of an exclusive deal with Uber Eats. That’s when the jump in delivery order volume took shape and led Shake Shack to plant firmer roots. The brand built out its technology development team in collaboration with Uber Eats fulfillment, allowing for more direct contact with guests, So says, and “ensuring the ultimate, frictionless experience.” Alongside, Shake Shack launched a mobile-first web redesign and introduced deliv ery in the Android Shake app as well as new payment options, including Apple Pay, Google Pay, and contactless options. The overall value proposition was a lure, too. “Our app menu is our lowest price menu compared to all nationwide delivery apps, and we don’t require subscription fees to access our low deliv ery fees,” So says. Fees don’t change, there’s no surge pricing, or menu markups. Shake Shack is rewarding direct guests in an effort to bolster its base and get personal. “We’ll regionalize their experience and target offers based on their behavior, which we cannot see if guests are ordering via third party,” So says. For instance, if a guest is based in New York City, Shake Shack can share local events and relevant news, everything from chef collaborations, events, and new openings. GETTING PHYSICAL Returning to the point of in-store traffic, this might be where Shake Shack is most visibly evolving—inside and outside. Starting with the former, the brand in November committed to retrofitting all locations with kiosks by the end of 2023. At that point, roughly half of units had them. Fogertey says kiosks “are a really important part of our story right now,” and it’s easy to grasp where she’s coming from. On paper, they’re a great

the merchandising is. “We’re selling more LTOs,” Fogertey says. “We have more of a higher premium attach rate on those [kiosk] channels.” Spun another way, kiosks empower Shake Shack to optimize labor to other parts of its guest journey. They provide operators flexibility during peak traffic and staffing challenges. Additionally, kiosks represent Shake Shack’s highest-mar gin channel, which doesn’t hurt, either. In restaurants where it has kiosks, about 75 percent of sales flow through kiosk and digital channels. As noted, digital plus kiosk mix 57 percent of total sales today for Shake Shack. In 2019, the figure was 26 percent. “We have the ‘Stand For Something Good [mantra],’” Fogertey says. “We’re hopeful the kiosks will make you stand not as long for something good.” Shake Shack doesn’t generally lack for buzz. One trip to the Times Square store and the boisterous lines that wrap around, will prove that. But the reality is Shake Shack remains a brand relatively young in its growth journey. Back in January 2020, ahead of the crisis, 60 percent of the burger chain’s domestic units were less than 3 years old. Twenty four percent had been on the market for 12 months or less. The average age of restaurants across 163 U.S. corporate venues was 2.9 years. Twenty-three of Shake Shack’s 31 markets at the time boasted five or fewer locations. And this isn’t even getting into the global and licensing picture (the brand ended 2022 with 182 licensed Shacks and expects 25–30 openings in 2023). The 430-plus global locations today cover 32 states, plus Washington, D.C., and 16 countries. Shake Shack opened 36 new domestic corporate stores last fiscal year, 22 of which landed in Q3. It debuted 33 licensed Shacks, 13 in the final period. There are 23 airport Shakes open worldwide; four roadside travel plaza spots, with three to five more on deck for this year. Ahead as well is Shake Shack’s first licensed opening with a resort partner in the Bahamas, at the Atlantis Resort. In all, Shake Shack’s roadmap has a vast Atlas in front of it. Fogertey says the kiosks play a key role here as well, given they visually lay out the brand’s differentiators from the out set. What makes Shake Shack’s menu unique? Guests can see instead of read it. A recent note from Fogertey’s past shop in Goldman Sachs expressed excitement over the brand’s “diversification of store formats and think this will be key in driving unit growth for the company.” This sentiment, as much as any, illuminates Shake Shack’s promise. COVID and all of its disruption, as well as the brand’s relatively small footprint compared to its overall projection, means the future is rife for innovation. The fast casual launched “Shack Track” at the start of the pandemic in response to the digital boom. “Many of the fast pivots in the early days of the pandemic soon became perma nent functions,” Fogertey says. And this included implementing multi-channel delivery, enhancing digital pre-ordering, and expanding Shake Shack’s fulfillment capabilities. Shack Track, dressed down, is the brand’s digital pre-ordering and fulfillment experience. It manifests across pickup shelves, curbside pickup, pickup windows, and more. The need to enhance the physi

return on capital. You can put four to five-plus in each location and take out cash registers (there will always be at least one of those, Fogertey says, for guests who use cash or for the sake of alcohol purchases). The brand can redirect labor within stores and appreciate a nice lift on ticket sales given how superior SHAKE SHACK'S ASSET EVOLUTION MIGHT BE THE MOST VIVID PART OF ITS JOURNEY FORWARD.

SHAKE SHACK

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APRIL 2023 | QSR | www.qsrmagazine.com