Shake Shack said it is preparing to reopen dining rooms with some restaurants, dubbed “Shack Track” stores, modifying exteriors by adding drive-thru lanes and walk-up windows to accommodate social distancing requirements.
The new pickup option codifies makeshift off-premise pick up stations the New York City-based chain created when restaurants were forced to switch to takeout and delivery.
Initially, Shake Shack offered carryout when stay-at-home orders swept the nation. But in early April, the company stopped carryout, and began offering guests new ways to pick up meals, including pop-up drive-thru lanes and curbside pickup.
CEO Randy Garutti said the Shack Track stores meet consumer demand for contactless ordering as businesses start to reopen across the U.S.
“Diners and guests are looking around, and saying, ‘I want to eat out, but when I do I need to trust that brand,’” Garutti said.
The chain’s investments in digital technologies, including its app, has “very literally” kept the burger chain in business during the crisis, he said.
As previously reported in early April, the chain saw same-store sales drop 12.8% in the first quarter, driven by 29% plunge in growth in March. New York City, the birthplace of the brand, has been one of the hardest regions hit.
Heading into the second quarter, Shake Shack said the chain’s nimble response to the pandemic is paying off.
Digital sales have been hovering at 80% for the last three weeks. For the week ending April 29, digital sales accounted for 84% of total sales, up from 18% from the week ending March 11.
The app and web channels showed the most significant growth, increasing nearly 3 times compared to last year, the company said. Still some stores are still down as much as 70% to 80%.
“While these sales in aggregate are still a material reduction from pre-COVID-19 levels, we're encouraged by the consistency of week to week improvements and the clear signs of a path to recovery,” Garutti said.
With sales picking up, Garutti said the brand has “gradually begun to bring back a number of our furloughed team members” after cutting 1,000 of them a few weeks ago. The company, known for its employee benefits, has also increased hourly wages by 10% through June 3 and is guaranteeing second quarter bonuses for all active managers.
Shack Track stores will have drive-up car lanes for pick up of mobile orders.
On the Shack Track stores, Garutti did not say how many restaurants would adopt the new drive-up car lanes and walk-up window features.
In a rendering shown to investors, the drive-thru lanes look like Chipotle Mexican Grill’s Chipotlanes, which are designed for pickup of digital orders. The Shack Track will also have new pickup areas to improve flow and encourage digital pre-ordering.
“We've been studying current Shack layouts and future Shack designs in order to identify where this model can be quickly added,” Garutti said. “It may take time and many forms but all towards the goal of continuing to build the community gathering places the world needs, while adding a level of convenience, safety, distance and frictionless pickup to meet the needs of our guests.”
In terms of reopening, the company said it has not made any decision yet on when restaurants will reopen dining rooms, even in jurisdictions that are easing business restrictions.
But when they do, consumers will notice a lot of space between guests, blocked off tables and different spots to pick up food.
“We’re making sure it can be done safely,” Garutti said. “We’re going to take the more cautious route.”
Total revenue increased 8% to $143.2 million. Net loss of nearly $1 million, compared to net income of $2.5 million in the same quarter last year. The company closed the quarter with 287 restaurants.
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