Jonah Engler on: Is Shake Shack An Innovator?

This time last year many in the restaurant industry were discussing the rise of the artisan burger and the demise of the fast food meal among more discerning – if equally busy – families. If they were going to pay ten bucks for a burger and fries anyway, the logic went, people would just sit down and enjoy it. But some “fast” burger joints resisted the trend. Chains like Five Guys continued to gobble up market share while other burger chain also-rans tried an endless line of gimmicks to keep up with industry Big Dog, McDonalds.


But what about those fringe businesses? The ones, like Five Guys, where the quality is arguably better, but the décor and expectation still say “fast food?” Marketers came up with a name for the line crossers. “Fast Casual” became the go-to buzzword, and now at least one NYC-based burger chain is ready to make the jump to play with the big boys. Shake Shack recently filed for an initial public offering, telegraphing plans to list on the NYSE under the ticker symbol “SHAK.”

Shake Shack is an interesting example of grassroots business success. Founded as, essentially, a hot dog cart to raise funds for the renovation of Madison Square Park, the Shack exploded in popularity and grew accordingly. From temporary endeavor to lasting franchise, with 63 restaurants and more than $82 million in revenue in 2013. The company is also a solid example of a growing compromise consumers are making between quality and quick. While McDonald’s has been losing for four straight quarters, Shake Shack posted a 40% surge. The success is likely because Shake Shack found a winning formula. They realize people still want fast and relatively inexpensive food options. But they also want decent quality and good taste.

Shake Shack meets that middle ground with beef burgers that are never frozen and are free of hormones and antibiotics. Consumers can taste the difference…and they are increasingly willing to pay for it.

Jonah Engler is a financial expert and an avid coffee lover from New York City.