Shake Shack has long been outgrowing its scrappy startup status. The 20-year-old New York City-based burger chain announced just before the ICR conference in Orlando, Fla. that Shake Shack’s new long-term growth estimate is 1,500 stores—more than quadruple its initial growth target set in 2015 when the company first went public.
Shake Shack ended the fiscal 2024 year with 329 company-operated stores, so while there is a long runway ahead, the company is confident in its ability to balance growth, profitability, and brand quality.
Shake Shack also released its preliminary results for the fourth quarter and full fiscal year of 2024 on Monday morning, with same-store sales up by 4.3% and total revenue up by 14.8%.
“Getting from 330 up to1,500 Shacks will start with building on this great foundation that has been put in place, but it's going to take some changes too, and some new ways of thinking,” Shake Shack CEO Rob Lynch said during Monday’s presentation at the ICR conference. “We anticipate growing our revenue by double digits –which is growth consistent with what we're executing today—and delivering double-digit systemwide unit growth too.”
One of the biggest strategies Shake shack will implement on its road to 1,500 stores is to build out in more spacious, suburban locations. For a long time, most of Shake Shack’s portfolio was centered on smaller, urban stores with walkup windows, especially in its hometown of New York City. Now, in order to quadruple its store count, Shake Shack will lean into new markets and different formats, many with drive-thrus.
“We need to go in to places we haven't really been before: we need to go out into suburban America,” Lynch said. “We're looking at smaller footprints so we can go into real estate that we didn't previously have access to, and that’s going to open up the aperture and allow us to expand rapidly. In order to do that, we need to be able to deliver consistent margins with where we are today, with smaller Shacks getting less volume.”
One secret to Shake Shack’s continued success and growth even in the face of industry-wide adversity, is its ability to maintain its scrappy underdog branding, even with hundreds of locations open nationally.
“We spend about 1% of our total revenue on advertising,” CFO Katie Fogertey told Nation’s Restaurant News. “That's very low compared to peers. So, as we're continuing to scale, we have the benefit of being known as the underdog, whereas our larger peers already have this very big established base on advertising.”
Fogertey added that each of the Shake Shack stores has a local feel, without a cookie cutter store design that makes each restaurant feel the same:
“We want [Shake Shack] to be people's local hangout spot,” she said. “That’s not going to change, but what is evolving and helping us to scale and accelerate our development is simply having prototypes and being able to go to market quicker. We’re scaling up the whole process.”
Shake Shack has set its sights on more than just ramped up development in 2025 and beyond. Lynch said that this year, the company will be focused on strategic culinary innovation, targeted marketing, and digital omnichannel excellence. The company also wants to maintain its semblance of value at a time when many restaurants are struggling to balance growing costs with tightening consumer wallets. This might mean adding combo meals, which Lynch hinted could be coming soon.
“We will mitigate inflation to maintain our margins, but we want to continue to improve our value perception in the marketplace, while maintaining margins, and things like combo meals will help that and will speed things up on the operations side,” Lynch said.
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