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Category: Shake Shack and Stock Market
Last updated: 2 June 2020 Stock price: $55.16 On this page we will look to provide more details about Shake Shack a modern day roadside burger stand with 275 shacks in 15 countries and 30 states in the US.
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About Shake Shack
Shake Shack Inc. was formed on September 23, 2014 as a Delaware corporation. Shake Shack Inc. Class A common stock trades on the New York Stock Exchange under the symbol "SHAK."
Shake Shack is a modern day "roadside" burger stand serving a classic American menu of premium burgers, hot dogs, crispy chicken, frozen custard, crinkle cut fries, shakes, beer, wine and more. Originally founded in 2001 by Danny Meyer's Union Square Hospitality Group ("USHG"), which owns and operates some of New York City's most acclaimed and popular restaurants—such as Union Square Cafe, Gramercy Tavern and Maialino—to name a few. Shake Shack began as a hot dog cart to support the rejuvenation of New York City's Madison Square Park through its Conservancy's first art installation, "I Taxi." The cart was an instant success, with lines forming daily throughout the summer months over the next three years. In response, the city's Department of Parks and Recreation awarded Shake Shack a contract to create a kiosk to help fund the park's future. In 2004, Shake Shack officially opened. Soon it became a gathering place for locals alike, and a beloved New York City institution, garnering significant media attention, critical acclaim and a passionately-devoted following. Since its inception, Shake Shack has grown rapidly—with 275 Shacks, as of December 25, 2019, in 15 countries and 30 states, as well as the District of Columbia—and we continue to expand globally bringing the Shake Shack experience to new guests around the world.
Shake Shack is a modern day "roadside" burger stand serving a classic American menu of premium burgers, hot dogs, crispy chicken, frozen custard, crinkle cut fries, shakes, beer, wine and more. Originally founded in 2001 by Danny Meyer's Union Square Hospitality Group ("USHG"), which owns and operates some of New York City's most acclaimed and popular restaurants—such as Union Square Cafe, Gramercy Tavern and Maialino—to name a few. Shake Shack began as a hot dog cart to support the rejuvenation of New York City's Madison Square Park through its Conservancy's first art installation, "I Taxi." The cart was an instant success, with lines forming daily throughout the summer months over the next three years. In response, the city's Department of Parks and Recreation awarded Shake Shack a contract to create a kiosk to help fund the park's future. In 2004, Shake Shack officially opened. Soon it became a gathering place for locals alike, and a beloved New York City institution, garnering significant media attention, critical acclaim and a passionately-devoted following. Since its inception, Shake Shack has grown rapidly—with 275 Shacks, as of December 25, 2019, in 15 countries and 30 states, as well as the District of Columbia—and we continue to expand globally bringing the Shake Shack experience to new guests around the world.
Quick facts about Shake Shack
- Shake Shack is listed on the New York Stock Exchange under share code ticker: SHAK
- Shake Shack has 7 603 employees
- Shacks located in the Northeast and the New York City metropolitan area comprises approximately 44% of the total domestic company-operated Shacks as of December 25, 2019
- Shake Shack has 275 outlets
- Of the 275 Shake Shack Outlets 90 is outside the USA
- Shake Shack sales for 2019 fiscal year: $574.625 million
- Earnings per share for fiscal 2019: $0.61
- Shares in issue: 34.422 million
- Cash and equivalents on their balance sheet: $37.099 million
- Stockholders equity in Shake Shack: $321.985 million
Main menu items of Shake Shack
We embrace our fine-dining heritage and are committed to sourcing premium ingredients, such as all-natural, hormone and antibioticfree beef, chicken and pork, while offering excellent value to our guests. Our core menu is inspired by the best versions of the classic American roadside burger stand. From time to time we supplement with limited-time offers while also looking ahead to potential new categories we may consider adding to the menu over time. We are committed to culinary creativity and excellence, collaborating with award-winning chefs, talented bakers, farmers and artisanal purveyors who work with us in different and exciting ways. As we grow across the country, we are excited to continue and grow these collaborations with the talented chefs and suppliers who are leading our industry. While we’re extraordinarily proud of our legacy, and our position today, we will not rest on our laurels. We will continue to look for the best ingredients and culinary partners, so we can exceed our guests' expectations in every aspect of their experience.
Our menu focuses on premium food and beverages, carefully crafted from a range of classic American foods at more accessible price points than full-service restaurants.
Burgers & Chicken
Our burgers are made with a proprietary whole-muscle blend of 100% all-natural, hormone and antibiotic-free Angus beef, ground fresh, cooked to order and served on a non-GMO potato bun. We take great care in the preparation of our burgers—from sourcing, to handling, to cooking—to ensure that their taste and quality is second to none. Our signature burger is the ShackBurger®, which is a four-ounce cheeseburger topped with lettuce, tomato and ShackSauce™. Our burger offerings also include the SmokeShack®, 'Shroom Burger™ (a vegetarian burger), Shack Stack® and Hamburger. Our Chick’n Shack™ is a 100% all-natural, hormone and antibiotic-free cage-free chicken breast, slow cooked in buttermilk herbs, hand-battered, hand-breaded and crisp-fried to order. Our Chick'n Bites— which we added to our core menu in 2019—are made with our with all-natural, antibiotic-free whole muscle that is sous-vide cooked for optimum flavor, moisture and texture, making them extra juicy and tender.
Crinkle Cut Fries
Our classic and passionately loved crinkle cut fries are made from premium Yukon potatoes and are prepared 100% free of artificial trans-fat. The tactile pleasure and emotional attachment that our guests have to the crispiness and ridges of our crinkle cut fries is a nostalgic ode to the roadside burger stand of yesteryear. Guests can also enjoy our Cheese Fries, which are our crinkle cut fries topped with a proprietary blend of cheddar and American cheese sauce.
Hot Dogs
Shake Shack was born as a hot dog cart in 2001 and we’re proud to honor that legacy by offering a premium hot dog category. Both our beef hot dogs and our chicken dogs are made from 100% all-natural, hormone and antibiotic-free beef and chicken. Our signature Shack-cago Dog® is our nod to the classic Chicago-style hot dog, topped with Shack relish, onion, cucumber, pickle, tomato, sport pepper, celery salt and mustard.
Frozen Custard
Our premium, dense, rich and creamy ice cream, hand-spun daily on-site, is crafted from our proprietary vanilla and chocolate recipes. We use only real sugar (no corn syrup) and milk from dairy farmers who pledge not to use artificial growth hormones. Shakes remain our guests' favorite in this category and are scooped and spun to order. Our concretes are made by blending frozen custard at high speed with premium mix-ins.
Beer, Wine and Beverages
Our proprietary ShackMeister® Ale, brewed by Brooklyn Brewery, was specifically crafted to complement the flavor profile of a ShackBurger. At select locations, we also offer local craft beers tailored to each Shack's geography. Our Shack Red® and Shack White® wines are sourced
and produced exclusively by Gotham Project, which provides our guests with premium beverage options not commonly found in our industry—a nod to our fine dining heritage. In 2019 we launched our canned red, white and rosé wines at our Shacks serving alcohol. In addition, we serve Abita Root Beer, Shack-made Lemonade, organic fresh brewed iced tea, Fifty/Fifty™ (half lemonade, half organic iced tea), Stumptown cold brew coffee, Honest Kids organic apple juice and Shack|20® bottled water, from which 1% of sales goes towards supporting the clean-up of water sources around the world.
Dogs
Are Welcome Too We know that many dog owners treat their four-legged friends as family members. At our first Shack in Madison Square Park, we wanted to include dogs as part of the community gathering experience and developed the "Woof" section on our menu. Since then, we’ve expanded the “Woof” menu to additional locations. ShackBurger dog biscuits and vanilla custard make up our signature Pooch-ini®, which is available at Shacks with an outdoor space. We also serve dog biscuits to-go, handcrafted exclusively for us by a New York-based bakery.
Our menu focuses on premium food and beverages, carefully crafted from a range of classic American foods at more accessible price points than full-service restaurants.
Burgers & Chicken
Our burgers are made with a proprietary whole-muscle blend of 100% all-natural, hormone and antibiotic-free Angus beef, ground fresh, cooked to order and served on a non-GMO potato bun. We take great care in the preparation of our burgers—from sourcing, to handling, to cooking—to ensure that their taste and quality is second to none. Our signature burger is the ShackBurger®, which is a four-ounce cheeseburger topped with lettuce, tomato and ShackSauce™. Our burger offerings also include the SmokeShack®, 'Shroom Burger™ (a vegetarian burger), Shack Stack® and Hamburger. Our Chick’n Shack™ is a 100% all-natural, hormone and antibiotic-free cage-free chicken breast, slow cooked in buttermilk herbs, hand-battered, hand-breaded and crisp-fried to order. Our Chick'n Bites— which we added to our core menu in 2019—are made with our with all-natural, antibiotic-free whole muscle that is sous-vide cooked for optimum flavor, moisture and texture, making them extra juicy and tender.
Crinkle Cut Fries
Our classic and passionately loved crinkle cut fries are made from premium Yukon potatoes and are prepared 100% free of artificial trans-fat. The tactile pleasure and emotional attachment that our guests have to the crispiness and ridges of our crinkle cut fries is a nostalgic ode to the roadside burger stand of yesteryear. Guests can also enjoy our Cheese Fries, which are our crinkle cut fries topped with a proprietary blend of cheddar and American cheese sauce.
Hot Dogs
Shake Shack was born as a hot dog cart in 2001 and we’re proud to honor that legacy by offering a premium hot dog category. Both our beef hot dogs and our chicken dogs are made from 100% all-natural, hormone and antibiotic-free beef and chicken. Our signature Shack-cago Dog® is our nod to the classic Chicago-style hot dog, topped with Shack relish, onion, cucumber, pickle, tomato, sport pepper, celery salt and mustard.
Frozen Custard
Our premium, dense, rich and creamy ice cream, hand-spun daily on-site, is crafted from our proprietary vanilla and chocolate recipes. We use only real sugar (no corn syrup) and milk from dairy farmers who pledge not to use artificial growth hormones. Shakes remain our guests' favorite in this category and are scooped and spun to order. Our concretes are made by blending frozen custard at high speed with premium mix-ins.
Beer, Wine and Beverages
Our proprietary ShackMeister® Ale, brewed by Brooklyn Brewery, was specifically crafted to complement the flavor profile of a ShackBurger. At select locations, we also offer local craft beers tailored to each Shack's geography. Our Shack Red® and Shack White® wines are sourced
and produced exclusively by Gotham Project, which provides our guests with premium beverage options not commonly found in our industry—a nod to our fine dining heritage. In 2019 we launched our canned red, white and rosé wines at our Shacks serving alcohol. In addition, we serve Abita Root Beer, Shack-made Lemonade, organic fresh brewed iced tea, Fifty/Fifty™ (half lemonade, half organic iced tea), Stumptown cold brew coffee, Honest Kids organic apple juice and Shack|20® bottled water, from which 1% of sales goes towards supporting the clean-up of water sources around the world.
Dogs
Are Welcome Too We know that many dog owners treat their four-legged friends as family members. At our first Shack in Madison Square Park, we wanted to include dogs as part of the community gathering experience and developed the "Woof" section on our menu. Since then, we’ve expanded the “Woof” menu to additional locations. ShackBurger dog biscuits and vanilla custard make up our signature Pooch-ini®, which is available at Shacks with an outdoor space. We also serve dog biscuits to-go, handcrafted exclusively for us by a New York-based bakery.
Competition of Shake Shack
The restaurant industry is highly competitive and fragmented, with restaurants competing on multiple areas, such as taste, price, food quality, service, location and the ambiance and condition of the restaurant. Our primary competitors include other fast casual restaurants, quick service restaurants and casual dining restaurants. Our competition includes multi-unit national and regional chains, as well as a wide variety of locally-owned restaurants. Our competitors may operate company-owned restaurants, franchised restaurants or some combination. Many of our competitors offer breakfast, lunch and dinner, as well as dine-in, carry-out and delivery services. We may also compete with companies outside of the traditional restaurant industry, such as grocery store chains, meal subscription services and delicatessens, especially those that target customers who seek high-quality food, as well as convenience food stores, cafeterias and other dining outlets. Our competition continues to intensify as new competitors enter both the burger and fast casual segments, and in addition, offer new digital experiences. We also face increasing competitive pressures from some of our competitors who have recently announced initiatives to offer better quality ingredients relative to their previous offerings, such as antibiotic-free meat or plant-based meat alternatives.
We face significant competition for guests, and if we are unable to compete effectively, our business could be adversely affected" in Item 1A, Risk Factors. We strive to engage our guests with a differentiated experience that includes great food, unique and thoughtful integration with local communities and high standards of excellence and hospitality. We believe that we are well positioned to continue to grow our market position, as we believe consumers will continue to trade up to higher quality offerings given the increasing consumer focus on responsible sourcing, ingredients and preparation. We believe that many consumers want to associate with brands whose ethos matches their own, and that Shake Shack, with our mission to Stand For Something Good and our culture of Enlightened Hospitality, is a distinct and differentiated global lifestyle brand.
We face significant competition for guests, and if we are unable to compete effectively, our business could be adversely affected" in Item 1A, Risk Factors. We strive to engage our guests with a differentiated experience that includes great food, unique and thoughtful integration with local communities and high standards of excellence and hospitality. We believe that we are well positioned to continue to grow our market position, as we believe consumers will continue to trade up to higher quality offerings given the increasing consumer focus on responsible sourcing, ingredients and preparation. We believe that many consumers want to associate with brands whose ethos matches their own, and that Shake Shack, with our mission to Stand For Something Good and our culture of Enlightened Hospitality, is a distinct and differentiated global lifestyle brand.
Media, Product Placement and Influencers
Shake Shack’s unique positioning has allowed us to garner robust media coverage across food, lifestyle, business and trade publications. We have been featured in outlets such as Bon Appetit, Food & Wine, Eater, Grub Street, Refinery29, BuzzFeed, People, New York Times, Wall Street Journal, Business Insider, CNBC, Fast Company, Forbes, Digiday and more. Shake Shack has been mentioned on morning shows like TODAY Show, Good Morning America, CBS Sunday Morning and LIVE with Kelly and Ryan, as well as late shows like Saturday Night Live, The Late Show with James Corden, Jimmy Kimmel Live!, The Daily Show, Late Night with Seth Meyers and Late Night with Jimmy Fallon.
We have been fortunate to receive considerable product placement in movies, TV shows and other media without any cost to the Company, and in some cases, has been able to charge fees for these location shoots. We have also been participating in feature stories, such as NYSE: Walk This Way, Men's Health, Foodable Network Podcast, First We Feast: The Burger Show, and Fast Company: The Recommender. Shake Shack’s popularity and cultural relevance has awarded us countless celebrity and influencer fans across Hollywood, music, fashion, sports and more.
We have seen organic promotion from the likes of John Mayer, Hailey Baldwin, Ashely Simpson, Matt Damon, Oprah, and Taylor Swift, to name a few. Influencer coverage has driven awareness of our presence at popular events, such as our participation at the Coachella music festival, and even highlighted our food truck at the wedding of two former Bachelor stars, NY Fashion Week and the Super Bowl.
We have been fortunate to receive considerable product placement in movies, TV shows and other media without any cost to the Company, and in some cases, has been able to charge fees for these location shoots. We have also been participating in feature stories, such as NYSE: Walk This Way, Men's Health, Foodable Network Podcast, First We Feast: The Burger Show, and Fast Company: The Recommender. Shake Shack’s popularity and cultural relevance has awarded us countless celebrity and influencer fans across Hollywood, music, fashion, sports and more.
We have seen organic promotion from the likes of John Mayer, Hailey Baldwin, Ashely Simpson, Matt Damon, Oprah, and Taylor Swift, to name a few. Influencer coverage has driven awareness of our presence at popular events, such as our participation at the Coachella music festival, and even highlighted our food truck at the wedding of two former Bachelor stars, NY Fashion Week and the Super Bowl.
Trademarks of Shake Shack
Since our inception, we have strategically and proactively developed our intellectual property portfolio by registering our trademarks and service marks worldwide. As of December 25, 2019, we had 25 registered marks domestically, including registrations in our core marks ("Shake Shack," "Shack Burger," ) and certain other marks, such as Stand for Something Good. Internationally, we have registered our core marks in 82 countries spanning six continents. These marks are registered in multiple international trademark classes, including for restaurant services, food services, non-alcoholic beverages and apparel. We also own the domain www.shakeshack.com as well as over 400 other domain names for use in other markets. In addition, we have agreements with the suppliers of our proprietary products stating that the recipes and production processes associated with those products are our property, confidential to us, and may not be provided to any other customer. Our proprietary products include the burger recipe for our whole-muscle blend, the patty grinding procedure and the product formulations for our ShackSauce, 'Shroom Burger, chicken breast, chicken breading and buttermilk herb mayo, cheese sauce, unflavored custard base, chocolate custard base, and certain toppings and custard mix-ins. We also have exclusive arrangements with our suppliers of ShackMeister Ale, Shack Red wine, Shack White wine, hot dog and chicken sausage, relish and cherry peppers.
Employees of Shake Shack
As of December 25, 2019, we had 7,603 employees, of whom 7,346 were hourly team members and Shack-level managers and 257 were Home Office personne
Seasonality of Shake Shack earnings
Our business is subject to slight seasonal fluctuations which can impact sales from quarter to quarter. Year-over-year and quarterto-quarter results can be also be impacted by the number and timing of new Shack openings. Additionally, given our use of a fiscal calendar, there may be some fluctuations between quarters due to holiday shifts in the calendar year.
Shake Shack (NYSE:SHAK) stock performance
The following graph and table illustrate the total return from January 30, 2015 through December 25, 2019 for (i) our Class A common stock, (ii) the Standard and Poor's 500 Index, and (iii) the Standard and Poor’s 600 Restaurants Index, assuming an investment of $100 on January 30, 2015 including the reinvestment of dividends.
Over the 5 year period Shack Shack provided an average annual return of 5.48% while the S&P 500 returned 12.4%. So the S&P 500 has comfortably outperformed the stock of Shake Shack over the 5 year period. However the stock performance of Shake Shack has outperformed the S&P 600 restaurant index over the last 5 years.
Our latest Shake Shack stock valuation (25 February 2020)
So based on Shake Shack's latest earnings report what do we value the stock of Shake Shack at? The group has made a loss during the period under the review, however there are other ways to value companies at instead of just relying on the earnings per share. Our valuation models provides a target price of $47.70 a stock.
We therefore believe the stock of Shake Shack is overvalued at its current price of $47.70. We usually recommend that investors look to enter a stock at least 10% below our target price. Thus a good entry point into the stock of Shake Shack would be at $42.90.
Since the stock of Shake Shack is trading at well above our suggested entry point and target price, we rate the stock of Shake Shake as a sell
We therefore believe the stock of Shake Shack is overvalued at its current price of $47.70. We usually recommend that investors look to enter a stock at least 10% below our target price. Thus a good entry point into the stock of Shake Shack would be at $42.90.
Since the stock of Shake Shack is trading at well above our suggested entry point and target price, we rate the stock of Shake Shake as a sell