It hasn’t been a great year for fast-casual restaurant chains. But one notable standout?
Shake Shack.
The New York City-based burger chain was one of the few fast-casual concepts to see positive traffic in the third quarter, and CEO Rob Lynch said those trends have continued into the fourth quarter.
In fact, in a fireside chat at the Raymond James TMT Consumer Conference in New York on Tuesday, Lynch said he’s expecting a strong 2026 for the brand, despite macroeconomic headwinds that are making younger and middle-income consumers a lot choosier about where they spend their dollars.
The former CEO of Papa Johns, Lynch joined Shake Shack about 18 months ago. Since then, he has set Shake Shack on a growth path. The nearly 380-unit chain is planning to quadruple its domestic unit count to 1,500 company-owned units.
This year, the chain expects to add 45 to 50 new restaurants—the most Shake Shack has ever opened in one year. And that number is expected to reach up to 60 in 2026.
That growth comes as the brand strengthens operations, Lynch said. Here are some of the initiatives that Lynch said will pay off with continued momentum:
Targeting the marketing
Shake Shack doesn’t have a footprint large enough to leverage national marketing, so the chain is working on very surgical and strategic investments in the top 20 markets where they expect to see the most return, Lynch said.
“We’re not all the way to bright,” said Lynch. “We still only invest 2.5% to 2.7% of revenue in marketing, which is significantly less than a lot of our peer group. But we’re making a lot of progress and we’re learning along the way.”
The focus will be on digital marketing, both social and Connected TV, that will find people within five miles of a Shack Shack to try to engage. “It’s about finding the right people, in the right spot at the right time,” he said.
The message? It will be all about Shake Shack’s made-to-order food and quality ingredients, he said. In the chain’s third-quarter earnings call, he said “Crackable” shakes will be on the menu lineup, as well as a French Dip Angus Sandwich, and a Baby Back Rib Sandwich, for example.
And Lynch noted that Shake Shack doesn’t yet have a loyalty program, which is currently in the works. That will help attract more teenagers, who Lynch said never want to spend money without earning points.
Discounting, but discounting less than others
Shake Shack in the third quarter reported success with app-based offers for $1 drinks, $3 fries and $5 classic shakes.
It’s discounting, sure, but Shake Shack is not planning to launch a $5, or even $10 meal anytime soon. Lynch estimates that 40% of sales in the quick-service world are from discounts. At Shake Shack, meanwhile, it’s “below single digits,” he said.
And, if discounts get customers in the door to try the food, it’s worth it, he added. “I feel great about our ability to leverage promotions to get our food into people’s mouths.”
Shake Shack has been investing in building traffic through its app, which is up 50%, and those contacts will roll into the loyalty program when it’s launched.
“That’s going to be a big improvement in our value perception,” he said. “We have an app that makes up less than 10% of our business today. That’s where we’re offering the biggest value, and it’s driving the traffic in there. And the lifetime value those app users is much higher than the occasional tourist or whoever comes in infrequently.”
Shake Shack has also been very disciplined about pricing, he said, despite higher beef costs.
The chain has also increased operating margins.
“How have we done that? Productivity,” he said. “We’re better operators today than we were six months ago, 12 months ago, six years ago.”
Operations and speed
One challenge for Shake Shack is that food is made to order. Still, Shake Shack has gotten faster, cutting one minute from service times, said Lynch.
And the chain has done that by becoming more efficient with labor. Restaurants used to ask the full crew to show up at opening at 10:30 a.m., for example, but the full crew wasn’t needed then because business didn’t get started for another hour. Now restaurants deploy more of those workers at peak times instead, which has helped speed service.
That move has also improved retention. Shake Shack six months ago had an average turnover of 90 days for hourly employees. That has increased to 180 days.
Other kitchen tweaks have paid off. The restaurants used to cook bacon on the flattop, which took needed cooking space away from burgers. So Lynch brought in ovens that could be used for cooking bacon to free up the space on the flattops to cook more burgers.
“It’s not rocket science,” he said. “These are not things that Elon Musk is going to invest in. But it’s transformative for our business. Operations is blocking and tackling.”
De-risking the supply chain
Lynch said Shake Shack has only scratched the surface on reworking its supply chain. That’s a big initiative for 2026.
His goal is to take the risk out of the supply chain, which has long been relying too heavily on single sources, he said.
“If that supplier gets hit by a hurricane or they just decide to go out of business, it disrupts our business,” he said. “So over the last six months, we’ve conducted RFPs across almost every facet of our business, and brought in multiple people to come in and compete for our business.”
That has resulted in better quality and price, he said.
Flexibility with growth
Shake Shack has seen more traffic challenges in larger urban markets, like New York and Washington, D.C.
“We’ve got great, high-volume restaurants in New York, very profitable, but not growing as rapidly as the resta of the country, and some of that is macro and some of that is micro,” he said. “We have some things to fix here.”
But elsewhere, the brand is going gangbusters, in regions like Florida, Texas, Arizona and the Midwest, he said. “So that’s where our new restaurants are growing.”
Texas, in particular, has responded incredibly well to marketing over the past six months, he said.
And international growth is another opportunity. Shake Shack’s 235 international locations are licensed, and Lynch said the chain has been very selective about the partners overseas.
The chain has developed some new smaller formats to give those partners more flexibility with real estate. And the brand has worked with then to develop menu items that fit better for specific regions, like a fish sandwich in Hong Kong, for example.
“That’s going to help our current front license partners grow, but it’s also going to allow us to go find new partners who are excited about markets that we haven’t penetrated before because of some of those barriers,” he said.
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