Operations

Shake Shack picks up speed in Q3

People don't want to wait 15 minutes for a burger and drink, the fast-casual chain's CEO Rob Lynch said. But there's still room to improve.
Shack Shack expects to add 80 to 85 new units next year. |Photo: Shutterstock.

Shake Shack units got a little faster in the third quarter, which helped traffic trends tick slightly positive.

The fast-casual burger chain on Wednesday said same-store sales were up 4.4% for the Sept. 25-ended quarter, which was largely a result of a 6% increase in menu pricing. But CEO Rob Lynch said the chain saw a 30-basis-point improvement in traffic into positive territory, though still only 0.3%.

The company raised menu prices another 1.5% this month to help offset inflation, but price increases are expected to roll off in the first quarter next year.

Margins also improved by 60 basis points to 21% during the quarter, and the chain rolled out an AI-driven labor deployment model that is already showing results in helping restaurants staff up with the right people at the right times.

“In the short term, we’re working on the blocking and tackling of operational excellence, including speed of service initiatives, process improvements and world-class training of our people,” said Lynch. “Over the long term, we’re working to optimize kitchen flows, equipment packages, and guest service models. All of these initiatives are expected to be long-term builders of repeat visits, which will increase frequency and overall sales.”

Improving speed, in particular, is important to Lynch. 

Shake Shack, which was founded by famed New York restaurateur Danny Meyer, has long had the fine-dining-world approach that people are willing to wait for quality food. “It was almost a point of pride,” he said.

But Lynch—who joined the chain as CEO earlier this year—believes those days are over, especially as Shake Shack grows drive-thru units.

“People don’t want to wait 15 minutes to get a burger and a drink,” he said in an interview.

The focus on speed alone has helped reduce wait times. Shake Shack has built operational scorecards to measure speed of service, for example. Simply “shining the light on that” has shown results, he said.

Also coming is a new loyalty program, which Lynch said could be ready for launch in the first half next year. 

“I can’t help but find that a bit ironic given that Shake Shack was built on the principles and culture of enlightened hospitality, where understanding the wants and needs of our guests is paramount,” Lynch said referring to a culture established by Meyer. “I truly believe that, given this heritage, we have an outsized opportunity to deliver enlightened hospitality in a world that increasingly craves it, but across a digital footprint.”

The New York-based chain swung to a net loss of $10.2 million for the quarter, compared with net income of $7.6 million in the same quarter last year. That loss was blamed primarily on costs associated with closing nine underperforming restaurants earlier this year.

Now Shake Shack is looking to accelerate growth next year, expecting to open between 80 to 85 new restaurants, of which 45 will be company owned. This year, the chain is expecting to add 75.

During the quarter, Shake Shack opened 17 new restaurants, including eight company units, and three drive-thrus, for a total of 552.

 

Members help make our journalism possible. Become a Restaurant Business member today and unlock exclusive benefits, including unlimited access to all of our content. Sign up here.

Multimedia

Exclusive Content

Financing

Innovation is great, until it isn't

The Bottom Line: Starbucks pushed through products recently while skipping its traditional testing processes, even as the coffee shop giant was working to improve operations. Those ideas are contradictory.

Financing

Fast-food chains get some big wins, despite a tough consumer environment

The Bottom Line: Wendy’s Krabby Patty Kollab generated strong sales for the chain. McDonald’s got traction with its Chicken Big Mac. Both proved that good marketing can win, even these days.

Financing

Corporate greed cooked BurgerFi, franchisees say

The once-promising better-burger chain has a new owner out of bankruptcy, but franchisees wonder whether damage done under prior leaders leaves any hope for a new beginning.

Trending

More from our partners