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Why Shake Shack isn’t worried about cannibalization

The fast casual said it’s working to add access and convenience to its operations, which should ease issues as it adds more stores in existing markets, according to its CEO.
Photo courtesy Shake Shack

Shake Shack is in the midst of doing something its never done before, a process that was greatly sped up by the pandemic:

It’s making it easier to get its burgers, fries and shakes.

Or, as CEO Randy Garutti put it last week, the chain is adding “access and convenience to a brand that has never been terribly convenient or accessible.”

By the end of this year, the New York City-based fast casual will have 30 walk-up windows and five drive-up windows. It’s slated to open its first drive-thru by year’s end. More than 70 restaurants now offer curbside pickup.

All of those access points will help the chain, which has 192 company-operated locations and 22 licensed ones, avoid stealing business from existing units as it goes “deep” into current markets, Garutti said.

“We’re not thinking too much about cannibalization,” he said during the recent Cowen Digital Dining Summit, adding that these convenience points will encourage diners to visit restaurants near them more frequently.

Garutti himself used Shake Shack’s curbside pickup option in New York while rushing his son to a sporting event the other day. Having different store formats and accessibility points will allow the chain to be specific about the type of restaurant it adds in any given location, he said.

“We do see some of our highest guest scores in curbside,” he said. “We see people liking the experience. The goal is that translates toward frequency over time … We’re just making it easier for you to go.”

Even though the chain is trying to make itself more convenient, it has yet to fully recover from the pandemic. Drag is coming from major urban centers like New York City and Chicago where workers have yet to return to offices and tourism has yet to pick up, Garutti said.

“The stuff that’s frustrating for us is the stuff that’s out of our control,” he said. “We need to see cities return. There’s still a significant part of our restaurant company in urban centers that are driven by people being in offices, commuting, tourism, events, theaters … We’re not down on cities. They may be down right now, but they’re going to be back. And when they are, Shake Shack’s there.”

Last month, Shake Shack reported its April sales were down 15% compared to 2019 levels. The chain plans to open up to 40 new locations this year and up to 50 new restaurants in 2022.

 

 

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