Shake Shack is correct that technology will move the customer experience forward, but the company needs to make some concrete decisions amid all its testing and iterating.
— Kristen Hawley
Shake Shack released its third quarter earnings on Wednesday, posting revenue of $94.6 million, with expectations of full-year revenue of $355 million.
CEO Randy Garutti shed light on the business’s growth plans, closely tied to technology as it continues to iterate and build on what he says is working. The ultimate goal: to better connect with customers by increasing personalization. Technology is a huge component of this, in the form of in-store ordering, the Shake Shack mobile app, and delivery.
“Tech touches all aspects of our business and we embrace that,” said CFO Tara Comonte. “We have always managed this business for the long term, and will continue to do so.”
Amid news that the U.S. can expect 32-35 new Shake Shack locations in 2018 and international growth — especially in Asia — Shake Shack has also opened its high profile Astor Place location in New York City. This location, different from all other Shake Shack restaurants, features touch-screen ordering, completely cashless transactions, and a different kitchen concept.
The team plans to use Astor Place as a testing ground for future innovation and technology, iterating on what’s working, according to Garutti. Employees at this location, which it calls “hospitality champs,” earn $15 per hour as a starting salary. This, he says, helps the company evolve its business model to account for “the real pressures of a future increased minimum wage.”
“It’s way too early to understand how it’s working,” said Garutti of the Astor Place store, noting there are no immediate plans for a second, similar location. But, he said, feedback is positive. “We’re getting a lot of favorable feedback. It allows our team to spend their time on hospitality instead of the technical stuff.”
Shake Shack’s app is an increasingly important part of the chain’s business and one it seems will focus on optimizing for the future. “We are pleased with the increasing levels of engagement within the app,” said Garutti, noting that the average customer spend when ordering through the app is higher than it is in stores.
Garutti didn’t offer much visibility into the future of delivery at Shake Shack, only that they’ll continue to look for the best partners for each region. The chain has partnered with both DoorDash and Caviar for delivery. “We know there is great demand for Shake Shack to be delivered,” said Garutti. “We want to do it really well. During these pilots we have tested packaging and learned about stores’ ability to handle orders at peak times.” They’re also testing and learning about technical integrations of services into Shake Shack’s existing technology — a hugely important feature as delivery becomes a major part of its business model.
According to Comonte, Shake Shack will continue to invest in infrastructure, including team members. “We will continue to innovate using technology to evolve the Shake Shack experience wherever the guest may be,” she said.