OPERATIONS
PHOTO: SHUTTERSTOCK
HOW SHAKE SHACK PLANS TO WIN MARKET SHARE IN 2026 The burger chain has been an outlier in the fast-casual segment, showing strong results. At the Raymond James conference this week, CEO Rob Lynch explained what’s working.
BY LISA JENNINGS 2 025 was not a great yearfor fast- casual restaurant chains. But one notable standout? Shake Shack. The New York City-based burger chain was one of the few fast-casual concepts to see positive traffic in the third quarter, and CEO Rob Lynch said those trends have continued into the fourth quarter. In fact, in an end-of-year fireside chat at the Raymond James TMT Consumer Conference in New York,, Lynch said he’s expecting a strong 2026 for the brand, despite macroeconomic headwinds that are making younger and middle-income consumers a lot choosier about where they spend their dollars. The former CEO of Papa Johns, Lynch joined Shake Shack about 18 months ago. Since then, he has set Shake Shack on a growth path. The nearly 380-unit chain is planning to quadruple its domestic unit count to 1,500 company-owned units. This year, the chain expects to add 45 to 50 new restaurants—the most Shake Shack has ever opened in one year. And that number is expected to reach up to 60 in 2026. That growth comes as the brand strengthens operations, Lynch said. Here are some of the initiatives that Lynch said will pay off with continued momentum: TARGETING THE MARKETING Shake Shack doesn’t have a footprint large enough to leverage national marketing, so the chain is working on very surgical and strategic investments in the top 20 markets where they expect to see the most return, Lynch said.
“We’re not all the way to bright,” said Lynch. “We still only invest 2.5% to 2.7% of revenue in marketing, which is significantly less than a lot of our peer group. But we’re making a lot of progress and we’re learning along the way.” The focus will be on digital marketing, both social and Connected TV, that will find people within five miles of a Shack Shack to try to engage. “It’s about finding the right people, in the right spot at the right time,” he said. The message? It will be all about Shake Shack’s made-to-order food and quality ingredients, he said. In the chain’s third- quarter earnings call, he said “Crackable” shakes will be on the menu lineup, as well as a French Dip Angus Sandwich, and a Baby Back Rib Sandwich, for example. And Lynch noted that Shake Shack doesn’t yet have a loyalty program, which is currently in the works. That will help attract more teenagers, who Lynch said never want to spend money without earning points. DISCOUNTING, BUT DISCOUNTING LESS THAN OTHERS Shake Shack in the third quarter reported success with app-based offers for $1 drinks, $3 fries and $5 classic shakes. It’s discounting, sure, but Shake Shack is not planning to launch a $5, or even $10 meal anytime soon. Lynch estimates that 40% of sales in the quick-service world are from discounts. At Shake Shack, meanwhile, it’s “below single digits,” he said. And, if discounts get customers in the door to try the food, it’s worth it, he added. “I feel great about our ability to leverage promotions to get our food into people’s mouths.”
Shake Shack has been investing in building traffic through its app, which is up 50%, and those contacts will roll into the loyalty program when it’s launched. “That’s going to be a big improvement in our value perception,” he said. “We have an app that makes up less than 10% of our business today. That’s where we’re offering the biggest value, and it’s driving the traffic in there. And the lifetime value those app users is much higher than the occasional tourist or whoever comes in infrequently.” Shake Shack has also been very disciplined about pricing, he said, despite higher beef costs. The chain has also increased operating margins. “How have we done that? Productivity,” he said. “We’re better operators today than we were six months ago, 12 months ago, six years ago.” OPERATIONS AND SPEED One challenge for Shake Shack is that food is made to order. Still, Shake Shack
12
RESTAURANT BUSINESS JANUARY 2026
Powered by FlippingBook