Sales projected to be flat this year after pretty rapid growth. I think the place is really delicious (both burgers and chicken sandwiches), and it's priced super competitively, but I can see how the long waits can annoy common folk?
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Use the mobile app, beat the plebes and their long line to delicious chicken sandwiches.
Is it just waits or is something else lurking? Quality control? I vaguely recall slightly less ... boisterous staff on my last few visits, but I could be nitpicking. I love everything about Shake Shack and thought for sure they signaled Mickey Ds, Burger Kings and Wendys tombstone.
I wouldn't say Shake Shack is a McDonald's, Burger King, or Wendy's take out. They're in a completely different category of food. Shake Shack could be considered fast casual, where I wouldn't necessarily give the same title to the other three.
Honest opinion? I think the market is too saturated with fast casual.
I think it's also a big city only type of place. It's just not the typical type of place for areas outside of large metropolitan areas. I could be wrong but I'm pretty sure their margins suck, so if they can't successfully scale outside NYC they will continue to struggle. They have 50 NYC locations, not much elsewhere.
You guys know Shake Shack offers burgers with 1030 calories.
Can't get that at McDonalds' even if you tried.
So the unhealthy factor is part of the reason. And only 72 stores with that massive market cap. Is putting it at $16.8M for EACH location. Absolutely outrageous, no matter how you slice it.
And then today we see traffic declining. Recipe for a major pullback.
was $50 M for each location in 2015, that's why I think it's a classic scale problem.
Your calorie numbers are a little exaggerated. And Mickey Ds has 700 800 900 sandwiches and burgers.
A few years back when it was just a few locations in NYC, the lines were insane because it was a treat and rare. Now, they're everywhere and there are basically no lines. Scarcity was their friend. They saturated the NYC market for sure.
I think it's expensive for fast casual. My order there is at least 50% more expensive than Chipotle, for example. Chipotle bowls are very filling and are about $7.50 here. Shake Shack's burgers and chicken sandwiches are not that big, so I need to get 2. They're $6 or so each. 50-100% more expensive than CMG depending on what I order. Unless it's cheaper in smaller cities, I don't see it having massive appeal outside the largest cities. And even in the largest cities, it has to compete with 5 guys, depending on geography possibly in-n-out, whataburger, and the million other fast casual or fast food places. Just too expensive and the waits are really long if you don't order ahead. And I say all this as someone who thinks their food tastes great and goes 1-2 times a month.
I agree. When I want fast casual burgers I go to Habit Burger or Five Guys.
The only thing that really drives me to Shake Shack is their promotional things, like the Hot ones chicken sandwich/burger (friggin delicious)
I think their issue is that Five Guys is 5x better
It's just not that good. There are plenty of regional burger chains that taste better and already have an established and loyal following. Why switch to another chain that serves smaller portions and crinkle cut fries and charges almost twice the price?
There are two types of people in this world; people who like Shake Shack, and people who don't have a Shake Shack near them. That said, I think the issue is name recognition in the markets they're expanding to which is close to your point.
I have a shake shack fifteen seconds outside my office and I agree with Sil
I think this is really all it is- they have a weird cult following and that's worked well for them but when they tried to expand everyone else acknowledged their food isn't good and it doesn't use better ingredients than other burger places.
Circa 2010 the trend for young people and other people living in urban areas was centered on health.
Being healthy became trendy.
Somehow a girl wearing $150 lulu yoga pants coming from her $100/Mth equinox gym isn't idealizing spending $20 on a greasy burger, fries and a milkshake for lunch.
She is fantasizing about a $20 acai bowl.
Great points. Then again, Starbucks is crushing it with their diabetes fraps and lattes. And Whole Foods is slumping. Little paradoxical...
Super overvalued since IPO and never grew into its valuation.
I have never seen relatively "fast-food-ized" pasta restaurant work. Say for example Olive Garden and noodles and company. When these pasta chains position itself as a "low-price" space, they no longer compete with up scale pasta restaurant but now with authentic "fast food" companies such as MCD or Burger King. These pasta franchises just can't compete with burger chains like MCD or Burger King. These burger chains pricing is so brutal. For customer seeking cheap meal, pasta chain seems so expensive compared to other fast food chains.
In same logic, I have never seen "up-scale" burger chain to work. If you go "up-scale" you are no longer competing with other burger chains like MCD but you are competing with Pasta companies. I mean, why would anyone want to spend that much on a "burger" when they can go to an italian restaurant?
"up-scale" burger chain makes no sense to me as is the case for "fast-food-ized" pasta chains.
I never get why anyone wants to get pasta at a restaurant. They buy it at 6 cents a pound and sell it to you for $14-25 dollars. Now obviously there are other ingredients like sauce but still 6 cents a pound.
Well, it's "Italian" food no matter the low input price. There just is more classy feel to it.
Anyways, hamburgers' history is from Mongols. They ate hamburger because it was easy to carry and quick-eat when they are riding horse and invading cities. It's not a food meant for family dinner but a filling convenient food. Up-scale is just not in hamburger's DNA.
I don't think up-scale Hamburger chain makes much sense
Once you've had fresh fresh fresh hand made pasta, from a great restaurant.... you'll know why. But I also don't pick what I want to eat based on the cost/lb.
Not that this is related to burgers, but this. A couple of my buddies worked at restaurants and they mentioned the nicer margins with pasta-based dishes.
Food and pricing in a restaurant is much more than an "ingredient price". There are external factors even more important than ingredients.
Pasta is more expensive than burgers first because of labor cost. How long does it take to make pasta? It's at least ten minutes and longer in most cases if you want fresh noodles. Also, think of the mess it makes and time it needs to clean your kitchen such as your frying pan and more importantly cleaning up "dishes". It takes a log of effort to make and clean up to offer pasta at a restaurant.
How long does it take to make a burger? Does Mcdonalds even have dishes in their restaurant? For Mcdonalds, they seem to need 30 seconds to make a burger and close to zero dish washing.
Most importantly, if you compare average time it takes for a customers to staying in store for pasta vs burger, pasta is longer. Pasta is longer not just because it takes longer time to eat but also it takes longer time to prepare. They wait more time inside the restaurant. Pasta restaurant needs to consider consumers staying longer period of time in their restaurant. Therefore, they will have less space for customers thus need to raise their pricing.
Your claim that pasta restaurant just rip customers pocket is just not true.
Take a look at Vapiano, it's a chain of Pasta restaurants all around the world, which started in Germany, and they prepare the pasta right in front of you within a max of 10 minutes.
It has worked very well in Europe from what I can tell, but not so much in the US it seems.
I see that Vapiano has 180 locations worldwide. Shake Shack has 120 locationsand Olive Garden once had close to 1000 locations in its prime. Due to limited locations and young age (15 years) I am not sure this company's model proved to be success yet.
They are struggling because nobody wants to pay 20$ for a burger/fries/drink when they can get a better comparable meal from say a 5 guys for 12-13$.
Never been there but will be in NY next week. Sounds like it is overrated.
Bareburger >> Shake Shack
Since this is the direction that this conversation seems to be headed.
Best Burgers in NYC
Wolfgang's Lugers Minetta Tavern
All the above is made from the trimmings on their prime steaks, is GIANT and comes with fries or onion rings. These places make you feel like an adult ordering a burger. I would take a date here and not worry I wasn't impressing her by ordering a $20 burger, and yes I know they are "steakhouses". The $20 bucks is marginally less expensive for the quality of meat you are getting and ambiance.
I have a sweet spot for J.G. Melon's but their beef just isn't the same quality.
I also have to say that Five Guys is better than Shake Shack food-wise and price-wise. Any other fast casual, whether it is Five Guys, Chipotle -- or even a fast food spot like Chic-Fil-A is IMO way more bang for your buck. Five Guys will fill you for hours. After Shake Shack, I'm still hungry.
Have In-N-Out and Shake Shack within a mile from my pad. Only get Shake Shack when I want a chicken sandwich. Would choose Chick-Fil-A over it if I had one nearby.
I honestly don't get the world's obsession with Chick-fil-A. Wendy's has a better chicken sandwich than Chick-fil-A.
Logistics. The only choice I have for a decent chicken sandwich is Shake Shack. I could drive for 20 min for Wendy's or Chick-fil-a or front flip out of my apartment and land at shake shack.
I would agree but recently I found they changed their chicken in their Spicy Chicken Sandwich. Not as good.
Definitely CANNOT be that the rising minimum wage is driving their costs up....definitely not
In-N-Out > Shake Shack. They'll never make it on the West coast. They have quickly saturated their limited market.
In-N-Out prices are 30% that of Shake Shake, 200% portion size, and 5x better quality (never frozen patties, fries made from scratch), and 100% reason to remember the name
There are better burgers here anyways...
Black Tap, HB Burger, The Counter, Black Iron, etc... All only a few bucks more, all WAY better.
I haven't tried it yet but hopefully will soon.
In my opinion the fast casual market is definitely saturated. There's only so many people that eat so many meals and for that price point, I can grab food for now and the next day from Chipotle.
I do like their burgers but don't agree that it's "priced super competitively"
There is a ShakeShack near my office in London. As far as I know it is the only one in the UK, it's delicious.
Easily the best burger available in the UK on the go. In order to achieve growth as a company, they should look to expand beyond the USA.
Shake Shack Files for IPO (Originally Posted: 12/29/2014)
Personally, I'm a Five Guys kind of guy. Regardless I've never really followed a restaurant IPO so I'm very curious to see how this unfolds. Thoughts?
http://www.reuters.com/article/2014/12/29/us-shakeshack-ipo-idUSKBN0K71…
Chipotle doubled on its first day of trading...was working at one of the banks on the deal at the time and was so pissed I couldn't invest.
Shake Shack is delicious. I don't know much about restaurant IPOs, but I was on the desk when Noodles & Co. IPOed. Demand was insane; it was oversubscribed by 3x or something like that and opened at double its book price. However, since then it's only gone down. Granted I know nothing about Shake Shack, I think the product is good enough that it will go the same way as Chipotle, but not the same magnitude.
Someone just get me some borrow and don't make me pay out the ass
Has anyone looked into licensing a Shake Shack? If so any idea on cost? It doesn’t look like they franchise.
https://www.vettedbiz.com/is-shake-shack-a-franchise-estimated-shake-sh….
Fancy burger space is so crowded....
10 to 15 years ago, these places were killing it when the competition was McDonald's and the Applebee's burger. Now there are a ton of amazing burger chains. I've honestly had Shake Shack only twice. It was a great burger! Probably is that I like 4 or 5 other places that are even better.
Overpriced in my opinion and you can find just as good quality elsewhere for less.
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