That feeling when you're stuck in a Shack line... We got it from Shake Shack's earnings — a 3.6% fall in same-store sales (adorably called "Same-Shack Sales") and foot traffic slipped, too. Some of the pickles that soured Shack's burger and dropped the stock 14%:
- "Significant slowdown" in the growth of its delivery biz — Shack decided to go exclusive with GrubHub, uprooting itself from DoorDash, Postmates, etc. The "moving out" process cost it deliveries.
- "Less menu innovation": Fad foods drive sales. Think Chipotle's carne asada, McDonald's Beyond Meat PLT, and Popeye's Chicken Sandwich (which literally caused a chicken shortage/fights). The Shack has lacked in the "dope foods" category.
Shake Shack is like a fast-growing teen (in a slump)... Most of the 15-year-old chain's 275 Shacks are just in the adolescent phase — 60% are less than 3 years old (teens, in millennial biz years). And Shack's been aggressively expanding into malls, airports, and "free standing pads." But the core problem is lack of innovation...
Shake Shack needs to shake up its menu... Last year's Chick'n Bites weren't a game changer. Even Shake Shack's CEO said "We chose to limit our menu innovation in comparison to prior years." But buzzy new food items are key to driving store traffic. So are buzzy new features, like McDonald's $1B worth of ordering kiosks, Domino's constantly-improving delivery app, and Sweetgreen's office food lockers.