Shake Shack Inc. plans to add a “handful” of kiosk locations in the first half of this year after testing the platform since October, the company CEO said Thursday.
The New York-based company launched a kiosk-only test at its Astor Place location in New York City, and Randy Garutti, Shake Shack CEO, said further units will offer a kiosk-cashier hybrid.
“We pushed everything pretty far with Astor Place,” Garutti said on the company’s fourth-quarter analyst earnings call.
“We had no cash at all, no cashiers, only kiosks. We really wanted to push that learning to see where it shook out.”
The company will offer a combination in future units, he said.
“We want to try mostly kiosk with a little bit of cashier,” Garutti said. “We want to see how people react, what they choose to use.”
Garutti said the feedback has been encouraging, but the company still is learning about the format’s effect on check average and labor-cost savings.
“We built the Shack with eight kiosks with the user experience similar to the app resulting in a highly visual, engaging ordering process for our guests,” he explained.
“We are in the early days for kiosks and we’re certainly in a period of testing and learning, but we do believe they represent a potential opportunity for enhanced guest experience as well as an important tool to mitigate increasing labor costs.”
The kiosk initiative is part of Shake Shack’s innovation in digital products, he said.
“We launched our iOS app in January 2017, followed by the Android version in July,” he said. “We're continually encouraged by the positive trends throughout our first year in both number of downloads and mobile sales as a percentage of overall sales.”
“The app will remain an increasingly important job for us, delivering a frictionless user experience and convenience for our guests as well as enabling more personalized and targeted marketing strategies in the future,” Garutti said.
Shake Shack will also tailor its online experience with upcoming new functions for the desktop and web ordering, he said.
“We are going to build data management and analytics capabilities to deliver enhanced customer insights,” Garutti said, adding that those are critical to the brand’s growth initiatives.
That data and analytics will also allow Shake Shack “to connect with our existing and potential guest and to increasingly focus on rewarding our best customers, and incentivizing more frequent visits,” he said.
To meet the consumers’ demands for delivery, Shake Shack is continuing to test with a variety of partners and markets, Garutti noted.
In the last four months of 2017, Shake Shack conducted tests with Postmates, DoorDash and Caviar, he said.
“Right now, we are currently testing new delivery packaging at the Shacks and we will continue to gather and learn from our guests’ feedback around this and our other delivery initiatives,” Garutti said.
For the fourth quarter ended Dec. 27, Shake Shack reported a loss of $14.4 million, or 55 cents a share, compared with net income of $3.9 million, or 15 cents a share, in the same period last year. Excluding tax charges, the company earned 10 cents a share. Revenue rose 31.2 percent in the quarter to $96.1 million.
Same-store sales in the quarter rose 0.8 percent, which included a 2.3 percent increase in price that was offset by a 1.5 percent decline in traffic.
In guidance, Tara Comonte, Shake Shack chief financial officer, said the company expect average unit volumes for its operated units to be between $4.1 million and $4.2 million at the end of this year. She said same-store sales for the year would be flat.
At midday Friday, Shake Shack shares were trading down 6.2 percent from Thursday’s closed of $41.21.
Garutti said Shake Shack will be moving its corporate offices within New York City this year, and the new location would allow for a test kitchen, which is expected to open in the summer, and help the brand’s menu innovation.
Shake Shack first opened in 2004 and now has 162 restaurants in 20 states and the District of Columbia as well as international markets.
Contact Ron Ruggless at [email protected]
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