Shake Shack, the legendary NYC burger chain that claims East Coast dominance over the In-N-Out pretenders, debuted on the New York Stock Exchange at $47 per share–up from the expected $14-$16 per share.
Shake Shack sold 5 million shares at $21 apiece to investors yesterday, raising $105 million, a price that ultimately values the chain at $745 million. The valuation reflects roller-coaster growth for the company that started as a literal shack in Madison Square Park a decade ago and grew from seven to over 50 locations in the last four years, quadrupling sales. Shake Shack brought in $82.5 million in revenue in 2013 and now has 63 locations worldwide.
Even though the chain has expanded to locations in Moscow and Istanbul, its executives are well aware that scarcity contributes to its “cool” factor. As we wrote at the end of December, Shake Shack noted in its S-1 filing that “as has happened when other restaurant concepts have tried to expand, we may find that our concept has limited appeal in new markets or we may experience a decline in the popularity of our concept in the markets in which we operate.”
That self-awareness shouldn’t surprise anyone who has read up on the minds behind Shake Shack’s success: Danny Meyer, CEO of Union Square Hospitality (which owns Shake Shack), is hyper-attentive to external factors. In a 2012 Fast Company interview, he said “we have a company called Hospitality Quotient, which teaches companies who are already the best in the world at what they do to become the best in the world at how they make people feel. So we use Hospitality Quotient to train the staff in with Shake Shacks abroad.”
That amounts to balancing both staff and customer needs–which include the Shack’s famously long lines at seemingly every location. There’s only so much you can do to accommodate popularity, but Shake Shack’s strategy is to make it apparent that they are going to bat for the customer, Shack CEO Randy Garutti told Fast Company in 2013. Part of that strategy is the Shack Cam, a live-stream camera trained on the line at the original Madison Square Park location.
“It became a fun part of our culture and our lore,” Garutti says. “By putting the Shack Cam online that was us trying to be on the side of the guest—not everyone has the time to come and wait in line.”