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Shake Shack CEO: We need to be an ‘omnichannel’ brand

The fast casual, which opens its first-ever drive-thru next month, continues to build out its digital channels and other ordering options after the pandemic upended its dine-in-focused operating model.
Shake Shack
Photo courtesy Shake Shack

Shake Shack CEO Randy Garutti wants more customers like his mom.

“My mom, who is not the most digitally savvy person, only orders through the app when she goes to Shake Shack,” Garutti said early Wednesday during a presentation at the Best Ideas Conference by MKM Partners. “I’m amazed by that every time.”

Digital orders like those from Garutti’s mother, of course, tend to be more profitable because they require less labor and typically come with a higher average check.

As far as fast casuals go, though, Shake Shack—known pre-pandemic for its bustling, big-city dining rooms—has been a fairly late adopter of digital technology.

It was less than a year ago that the burger chain even began a three-city, limited test of delivery directly through its app, via Uber Eats.

Today, though, Garutti said Shake Shack needs to be an “omnichannel” brand to meet its customers where they are. The company is slated to debut its first drive-thru next month, with plans to open as many as 10 of them next year. It has added walk-up windows, curbside pickup, in-store kiosks, app-based ordering, delivery and more.

This is a massive shift for a brand that less than three years ago worried whether delivery was even a fit for its concept.

“We do not want at any point in time to risk the quality of the experience we provide,” then-CFO Tara Comonte said at an investor conference in December 2018. “Shake Shack was born out of a fine-dining company. The delivery of our food does not necessarily fit with a great experience. Burgers and fries and shakes were not intended to be eaten a half-hour after they were cooked.”

Comonte left Shake Shack earlier this year. And, most importantly, the pandemic has changed so much for so many restaurants.

During the height of the pandemic, Shake Shack from a largely on-premise business to one in which 80% of its orders came in via digital channels. Now, that digital number is in the “mid-40s,” Garutti said, plus many customers are using the in-store ordering kiosks.

“They were more everyday becoming an omnichannel guest, which is super important to us,” he noted. “We are doubling down on meeting the guests where they are.”

He said the brand is at work of “getting rid of those annoying things that legacy restaurant set-ups have had … with an eye toward the same great Shake Shack experience you’ve always known but a lot more convenient.”

Garutti said he expects some bump in the road as Shake Shack figures out how to operate drive-thrus, all the while navigating a “funky” environment of higher labor, food and material costs.

“We are optimized for learning right now in these formats,” he said. “We’re going to get a lot of things wrong in these first drive-thrus. I’m certain we’ll make mistakes.”

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