It was the best of burgers, it was the worst of gadgets …
It happened in the span of a couple of weeks. A relatively new company in a “hot” category went public and soared … and an iconic retailer with thousands of stores across the country went belly-up.
First, the rise: On Jan. 30, well-known New York restaurant visionary Danny Meyer took Shake Shack public on the NYSE (ticker symbol: SHAK). This “fast casual” restaurant concept — started a decade ago as a seasonal concession in Madison Square Park — now operates locations on three continents. The stock experienced a large opening day “pop” (making backers and other insiders wealthy) and raised a large amount of capital to fuel faster growth. Expect Shake Shacks to sprout up all over the place in the coming years … further loosening the vise grip that traditional QSRs (McDonalds, Burger King, Wendy’s) have had on the hamburger business for at least two generations.
Now the fall: After several fitful and futile attempts to re-boot and re-discover relevancy in the world of consumer electronics retailing, Radio Shack has finally powered down and filed for Chapter 11 bankruptcy protection. Its 4,000+ stores will go dark in the very near future. A private equity group has reportedly purchased a portion of the company’s real estate portfolio, and many stores are slated to re-open as Sprint outlets in the coming year.
Media and business pundits say that these events are yet further evidence of a generational transition — from a focus on Boomers to a focus on Millennials — as the consumer cohort that really “matters.” Radio Shack, they explain, is a quintessentially Boomer brand: hopelessly analog and mired in old-fashioned technologies. Even the name: “Radio Shack” (an anachronism at best, at worst a joke) has outlived its usefulness as radios have long ceased to represent the cutting edge of consumer electronics technology.
The same experts opine that Shake Shack is the ultimate Millennial brand. Its brand promise of high-quality, great-tasting food made fresh on premise with locally sourced ingredients has spawned a cohort of loyal fans, patrons and advocates among consumers for whom these qualities have real value: the Millennials.
Here’s my insight: Radio Shack’s failure was driven by the same factors that have created Shake Shack’s success.
Take this simple experiment. While you still can, walk into the nearest Radio Shack. No one is shopping there … no Millennials and no Boomers … because there’s nothing to buy that you can’t get elsewhere — either for less money or with a better customer experience!
Then, stand in line at a Shake Shack at lunchtime. Witness a broad swath of consumers from virtually every demographic group — Boomers, Millennials, Gen Xers and Seniors — waiting 20 minutes or more and paying two or three times as much as a burger and fries would cost at a traditional QSR … and “loving it” (pun intended)!
It’s pretty clear that both Boomers (today’s parents) and Millennials (their kids) bear equal responsibility for the death of Radio Shack and the meteoric rise of Shake Shack.
In fact, Shake Shack may be the first great transcendent Boomer-Millennial brand … combining the taste-sense-memory of “hamburger-ness” that Boomers crave with the authenticity and sustainability that Millennials demand.
One has to wonder what all of these Shack developments portend for Pizza Hut or the International House of Pancakes?