HELLO Shake Shack was a really cool place. A few years ago I went to one in New York with my kid Zachary. It had reinvented the burger experience around a simple menu–well prepared food with higher quality ingredients–and they had beer and wine, which beckoned to parents like me. The developers of the concept had it down and expanded all over Manhattan and New York and did a public offering a year ago with a share price at $90. I was like, what? a burger joint going public, but what’s so special about it? That’s just it, there seems to be nothing special about it. The whole point about this brand and its approach to the fast food burger scene is that it’s competing in a market already dominated by McDonalds, who literally covers the nation and world.
Shake Shake has now expanded to just about everywhere. They’re in dozens of countries and in many cities in the U.S. but really what’s super different about this brand? Who’s it really targeting, and how fast can it really grow?
Shake Shack’s strategy needs to focus on their specific customer demographics and the right type of neighborhood: the hip urban scene that made them so successful in New York
McDonalds and the KFC’s of the world really are in a completely different category of business. Yes, really. The folks who demographically eat 2 to 4 meals a weak at fast food places are a different mix than the Shake Shack crowd. I’m positive that Shake Shack totally depends on more educated, urban-living Millennials and younger families willing to have a burger experience if it speaks to some of their key values, like better quality ingredients, craft beer and wine. On the other hand the McDonalds crowd is more suburban, working class and less educated, and now they’ve figured out how to get folks to buy more frequently by serving a super cheap breakfast all day.
Locate next to a Philz Coffee or Peets Coffee, near a Whole Foods or Trader Joes – these are the same customer
I think Shake Shack is great but it should never have gone public. It should have expanded in the mix of hot urban centers which are growing in the US and abroad. I assume they must very carefully target these locations but there just isn’t the volume that a McDonalds can produce with 15,000 locations in the US and 34,000 locations worldwide.
Shack Shack could make it if they figure out a strategy that places them next to the type of retail stores or shops that already”appeal to their demographic”. Locating next to a Philz Coffee or Peets Coffee, being near a Whole Foods or Trader Joes – these cater to the same customer. Shake Shack’s strategy needs to totally focus on the demographics, the neighborhood–the hip urban scene that made them successful in New York–otherwise they are going to get pressured out by local competition and the high cost of worldwide operations.
Focusing on the ecology of desirable retail environments, their specific demographic targets and symbiotic relationships with stores that drive the same customer is what they need to do. Hope they’re still shaking in two years. We’ll see.