Fast casual restaurant Shake Shack is leading the “better burger” revolution. Along with competitors Five Guys, Smashburger and Habit Burger, the company has elevated the good ol’ hamburger chain concept and turned the fast food industry on its head.
So far, customers are very receptive. The company’s 34 locations are known for long lines of eager customers. And while there are recent concerns that the company’s stock price is overvalued, many investors are bullish: when the company filed for an IPO in January, it more than doubled its stock price on the first day, raising its valuation to $1.6 billion.
A recent Fast Company article dissected Shake Shack’s winning formula to keeping its customers happy. Here’s a look at four strategies the company employs to drive customer satisfaction, increase market share and establish its place in the billion-dollar hamburger-and-fries industry.
Investing in store design
Danny Meyer, the company’s founder, brought his background in fine dining to the hamburger business, which he founded in 2004 with a single shop in New York’s Madison Square Park. From the start, the company sweated the smallest details, including the design of its stores.
Speaking about the company’s second New York restaurant (located across from the American Museum of Natural History), CEO Randy Garutti says, “We literally changed the place 100 times until we had that perfect vibe. In fine dining, you really are trained to think about all those details.”
The company’s sophisticated design differentiates it from many competitors. “Shacks are built to feel more modern and grown-up than the cartoony, red-and-yellow decorated junk-food joints that hawk value meals and 40-ounce sodas,” Fast Company observes.
In addition to paying careful attention to the design of its stores, the company also localizes its outlets, making sure that each fits in with its community.
Empowering employees to show customer love
Shake Shack invests in the happiness and well-being of its employees. It pays significantly more than the minimum wage and when it went public earlier this year, it provided stock options to managers, full-time employees and even part-time staff. This employee-first mindset, the company believes, leads to better customer experience.
Realizing the critical role that its frontline staff plays in driving customer satisfaction, Shake Shack empowers its employees to provide the best customer experience possible. In fact, Garutti often encourages employees to go overboard when they cater to customers’ needs.
Garutti explains, “Put us out of business because you are so damn generous with what you give the people who walk in this door. If there’s a kid crying, who’s going to walk over with a free cup of custard? I challenge you to put us out of business with how generous you are. Go do it. Give away free stuff.”
Listening to unhappy customers
In 2013, the company made a rare misstep. In an attempt to improve the quality of its french fries, it decided to abandon its frozen, crinkle-cut variety and introduced fresh, hand-cut ones.
"Everything we stand for is freshness, quality, doing things the harder way," explains Garutti about the decision. "We truly believed the product could be better."
But while its new fries aligned with the company’s all-natural ingredients ethos, there was one problem: the old, frozen kind (called “Crinkles”) were a customer favorite and people didn’t like the new kind. Eventually, Garutti decided that the company should listen to its customers.
Explaining the company’s decision to bring back Crinkles, Garutti wrote on the company’s blog: "We didn’t fully appreciate the simple, tactile pleasure and the emotional attachment our fans have to the crispiness, the ridges and pure joy that these fries bring to guests of all ages...It’s humbling to know that so many people care so deeply about our menu."
Providing better food
Ultimately, Shake Shack customers are eager to come back because of the quality of the food that the company offers.
“Shake Shack's burgers are more elevated than the offerings at the typical fast food burger chain, thanks to the 100 percent antibiotic-free Angus beef and buttered buns,” notes Business Insider’s Ashley Lutz. “Toppings include Applewood-smoked bacon and cherry peppers. This experience aligns with the values of modern consumers, who are demanding better food quality.”
In addition to its gourmet burgers, the company is known for its signature sauce, hot dogs and milkshakes. In an age when customers are looking for alternatives to fast-food chains, Shake Shack’s commitment to fresh, ethically-sourced products is finding a bigger and bigger market.
In 2014, the hamburger business generated $76.9 billion in the U.S. alone. Shake Shack’s revenue ($37.8 million in the first quarter of 2015—a year-over-year increase of 56 percent) is a small drop in that giant bucket, but the company’s plans to open at least 10 U.S. locations every year should help it steal more market share. The company’s rabid following—together with its winning formula in providing exceptional customer experience—will go a long way in supporting that plan.
In the end, the company’s not-so-secret secret formula to success is straightforward: a combination of high quality product, great people and outstanding service.
In an interview with QSR Magazine in 2012, Garutti summed it up well: “We have a great burger. We have a great value. We have great hospitality. But people come here just to be a part of the experience.”
Photo credit: m01229 (via Flickr)