Shake Shack Serves Up An IPO

Shake Shack, which has evolved from a hot dog cart in a New York park in 2001 to a global chain of 63 higher-end burger joints run by restaurateur Danny Meyer, CEO of the Union Square Hospitality Group, yesterday filed preliminary papers with the Securities and Exchange Commission to go public. 

“Shake Shack said … it expects to take market share in what it estimates as a $135 billion worldwide burger market as consumers ‘trade up to higher quality offerings,’” writes Maureen Farrell in the Wall Street Journal. “The company did not disclose how many shares it plans to sell or the price range of the offering,” she reports.



It “may be worth as much as $1 billion — not bad considering … Meyer started the joint as a public service,” write Bloomberg’s Leslie Picker and Leslie Patton. “Founded more than a decade ago to help support the restoration of Manhattan’s Madison Square Park, Shake Shack was an instant success, drawing long lines of urbanites attracted by Meyer’s modern spin on a roadside burger stand.”

“If you haven’t waited in a never-ending line for Shake Shack’s food, think Five Guys, In-n-Out, Good Stuff Eatery, or Smashburger,” blogs Alison Griswold in a Slate piece that serves up 10 “tasty tidbits” from the IPO filing. Among them are:

  • It fancies itself the creator of a new “fine casual” dining category.
  • Social media platforms “without filters or checks” are considered a risk. (But that doesn’t stop it from having a presence on Facebook, Twitter, Instagram, Pinterest, Foursquare, Tumblr, Google+ and YouTube.)

In a piece headlined “Nine Things We Learned About Shake Shack from Its IPO Filing,” the Wall Street Journal’s “Moneybeat” writers Erik Holm and Maureen Farrell say that the “filing boasts that the company ranked tenth on Restaurant Social Media Index’s top 250 restaurant brands, which was measured on “influence, sentiment and engagement.”

It also disclosed it “would use the as-yet-undetermined amount of proceeds from the stock sale in part to grow the number of U.S. stores from 36 to about 450,” reports Josh Kosman in the New York Post.

“We open Shacks in areas where communities gather, often with high foot traffic and substantial commercial density such as New York City’s Theater District, London’s Covent Garden and Dubai’s Mall of the Emirates,” according to the IPO. 

“We will continue to not only fill in existing markets such as New York, Boston, Philadelphia, Washington, D.C., Atlanta, Chicago and South Florida to leverage operational effectiveness as we cluster in high-density markets, but also enter new markets, such as Austin, where we have signed leases.” 

Indeed, “at lunchtime in Manhattan, busy workers mingle with tourists in lines that often spill onto the street,” writes Rachel Abrams in the New York Times. “And Shake Shack foods have found their way into the HBO series ‘The Newsroom,’ the Universal film ‘Tower Heist’ and ‘The Daily Show’ on Comedy Central, according to the prospectus.” 

“It’s also a name that people are going to recognize on Wall Street because it’s swept New York,” Leslie Pfrang, a partner at IPO advisory firm Class V Group, tells Abrams. “Everybody goes to Shake Shack.”

Business Insider’s Richard Feloni lists “7 Traits That Helped Danny Meyer Build The Shake Shack Empire,” winnowing it all down from a 2011 BI piece headlined “17 Secrets To Building Danny Meyer's Restaurant Empire.” Among those secret traits them are:

  • He places utmost importance on location. “Long before Starbucks popularized the phrase ‘the third place’ — somewhere to interact outside of work and home — it was neighborhood restaurants that helped to define places like Union Square,” Meyer is quoted as having said.
  • He is incredibly hands-on.

One thing we learned from the various stories and lists about the Shake Shack IPO this morning is that Meyer is a fount of wisdom in the “customer may not always be right but must always be heard” school of salesmanship. That philosophy was amply exhibited in this interview from 2006, when his memoir-cum-business advice book, Setting the Table: The Transforming Power of Hospitality, was published.

Meyer makes it all seem simple: hire people who, like you, work hard and respect the customer. When asked what made hardboiled New Yorkers line up at the nascent Shake Shacks, he replied: “Mostly, people from all walks of life love being with other people from all walks of life. They feel special about having Shake Shack in common. I'm proud of that.”

Shake Shack has expanded to locations in nine countries and 24 cites over the last decade or so. It will be instructive to see how those ideas scale with a billion bucks or so of fresh capital from “the public” behind it.

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