1 00:00:02,520 --> 00:00:07,040 Speaker 1: Bloomberg Audio Studios, podcasts, radio News. 2 00:00:08,080 --> 00:00:11,000 Speaker 2: Joining us now at the conference on site is Katie Fogerty, 3 00:00:11,039 --> 00:00:13,880 Speaker 2: chief financial officer of Shakeshack. Katie, thanks so much for 4 00:00:14,200 --> 00:00:17,600 Speaker 2: joining us here. Love to get a sense of everybody's 5 00:00:17,640 --> 00:00:20,040 Speaker 2: talking about Harris and what it might do to economic growth, 6 00:00:20,040 --> 00:00:22,240 Speaker 2: what it might do to the consumer. Who is the 7 00:00:22,239 --> 00:00:25,360 Speaker 2: consumer shakescheck, and what is that consumer telling you these days? 8 00:00:25,920 --> 00:00:29,400 Speaker 1: Great? So you know who we think of as our consumer. 9 00:00:30,280 --> 00:00:32,559 Speaker 1: We have you know, went out there and we have 10 00:00:32,640 --> 00:00:35,879 Speaker 1: this amazing real estate strategy, real estate strategy, and what 11 00:00:35,920 --> 00:00:40,400 Speaker 1: we've done is we've put these great community gathering places 12 00:00:40,400 --> 00:00:43,120 Speaker 1: in a lot of these you know, great communities, and 13 00:00:43,440 --> 00:00:45,760 Speaker 1: where we have attracted is just really kind of more 14 00:00:45,800 --> 00:00:48,880 Speaker 1: of a I would say, you know, more a middle 15 00:00:48,920 --> 00:00:51,800 Speaker 1: income to higher income guests. And we've seen that guest 16 00:00:51,880 --> 00:00:54,040 Speaker 1: be able to weather a lot more of the economic 17 00:00:54,360 --> 00:00:57,440 Speaker 1: headwinds than other you know, then the low income consumer 18 00:00:57,520 --> 00:01:00,680 Speaker 1: has been facing. And you know what we continue to 19 00:01:00,720 --> 00:01:03,640 Speaker 1: see is by leaning into our strength, which is delivering 20 00:01:03,680 --> 00:01:06,560 Speaker 1: a fine casual experience. So we think about kind of 21 00:01:06,560 --> 00:01:10,080 Speaker 1: bringing all those great guts of fine dining, elevated food, 22 00:01:10,440 --> 00:01:13,920 Speaker 1: premium ingredients, doing the things that you know, other you know, 23 00:01:14,240 --> 00:01:16,720 Speaker 1: Fast casual and QSR just are not willing to do. 24 00:01:17,120 --> 00:01:21,600 Speaker 1: Putting that in an amazing hospital or hospitable environment and getting 25 00:01:21,640 --> 00:01:24,680 Speaker 1: great guest service. That together has been a winning formula 26 00:01:24,800 --> 00:01:28,119 Speaker 1: to help us outpunch what has been you know, some 27 00:01:28,319 --> 00:01:31,600 Speaker 1: consumer headwinds that has been facing the industry, and we 28 00:01:31,640 --> 00:01:34,040 Speaker 1: are going to continue to lean into that. It's it's 29 00:01:34,080 --> 00:01:37,080 Speaker 1: helping us to differentiate and kind of pull apart from 30 00:01:37,160 --> 00:01:41,160 Speaker 1: the pack. And it's it's been our strength. Where are 31 00:01:41,200 --> 00:01:44,560 Speaker 1: our samples? I know, I mean what is this about? 32 00:01:45,120 --> 00:01:46,800 Speaker 3: You know, who doesn't want to burger at ten am 33 00:01:46,840 --> 00:01:50,080 Speaker 3: on a Wednesday close to open? So who are your 34 00:01:50,120 --> 00:01:52,680 Speaker 3: competitors then? So if you're a middle and high end consumer, 35 00:01:52,720 --> 00:01:53,320 Speaker 3: who would you. 36 00:01:53,280 --> 00:01:57,320 Speaker 1: Say as a competitor, Yeah, I mean we sell burgers, shakes, fries, 37 00:01:57,440 --> 00:01:59,640 Speaker 1: I think the best chicken sandwich out there in the business. 38 00:02:00,280 --> 00:02:03,320 Speaker 1: We view our competitors as being you know, anybody who 39 00:02:03,760 --> 00:02:06,360 Speaker 1: you know you might consider having lunch at or dinner at. 40 00:02:06,920 --> 00:02:09,880 Speaker 1: So that is a pretty wide array, and it also 41 00:02:10,040 --> 00:02:12,000 Speaker 1: can be you know, food at home. I mean that 42 00:02:12,040 --> 00:02:14,760 Speaker 1: can also be in you know, in an area where 43 00:02:14,760 --> 00:02:17,320 Speaker 1: you would have some share of stomach. So you know, 44 00:02:17,600 --> 00:02:21,160 Speaker 1: for the vast amount of you know, of our restaurants 45 00:02:21,200 --> 00:02:23,720 Speaker 1: out there, we are competing with a lot of people. 46 00:02:23,800 --> 00:02:26,160 Speaker 1: Now we are differentiated and we are kind of in 47 00:02:26,200 --> 00:02:30,120 Speaker 1: that category of one in the fine casual sector. But 48 00:02:30,200 --> 00:02:32,240 Speaker 1: at the same time we know that, you know, people 49 00:02:32,240 --> 00:02:34,120 Speaker 1: have lots of different options where they can go out 50 00:02:34,120 --> 00:02:35,119 Speaker 1: to eat, Katy. 51 00:02:34,919 --> 00:02:37,200 Speaker 2: There's a lot of concern out there about inflation. If 52 00:02:37,200 --> 00:02:39,679 Speaker 2: inflation were to come into your business, where would you 53 00:02:39,720 --> 00:02:41,040 Speaker 2: see it and how do you plan for that? 54 00:02:41,320 --> 00:02:44,040 Speaker 1: So we actually have been navigating through inflationary pressures for 55 00:02:44,080 --> 00:02:47,320 Speaker 1: a number of years here and doing so quite successfully. 56 00:02:47,360 --> 00:02:50,840 Speaker 1: I'll say, you know, we've had wage inflationary pressures in COVID. 57 00:02:50,919 --> 00:02:54,360 Speaker 1: It was actually very hard to get restaurant talent in 58 00:02:54,440 --> 00:02:57,880 Speaker 1: our restaurants to staff and to deliver our food. It 59 00:02:57,960 --> 00:03:00,079 Speaker 1: was not a desirable job at the time. And we 60 00:03:00,120 --> 00:03:03,120 Speaker 1: had we raised wages and had a very competitive and 61 00:03:03,160 --> 00:03:06,880 Speaker 1: compelling opportunity for our team members. We also introduced tips 62 00:03:06,919 --> 00:03:10,000 Speaker 1: as a way to compensate our team members as well 63 00:03:10,040 --> 00:03:13,720 Speaker 1: and give them added benefit. And then last year with 64 00:03:13,840 --> 00:03:15,920 Speaker 1: you know, with California Fast Food Wage Act, you know, 65 00:03:15,919 --> 00:03:18,920 Speaker 1: we faced through that as well. We've also had on 66 00:03:18,960 --> 00:03:21,839 Speaker 1: the food side, you know, inflationary pressures that have been 67 00:03:22,080 --> 00:03:24,720 Speaker 1: we've been navigating for a number of years as well. 68 00:03:25,520 --> 00:03:28,640 Speaker 1: But through all of this, through leaning in on our strength, 69 00:03:28,680 --> 00:03:31,640 Speaker 1: which is you know, again delivering that elevated you know, 70 00:03:31,720 --> 00:03:35,240 Speaker 1: experience to guests, giving them that you know, twenty five dollars, uh, 71 00:03:35,560 --> 00:03:38,280 Speaker 1: you know black truffle burger that we were actually selling 72 00:03:38,320 --> 00:03:40,520 Speaker 1: for ten dollars and giving them that great value. On 73 00:03:40,560 --> 00:03:44,160 Speaker 1: that side, we've been able to both grow sales and 74 00:03:44,280 --> 00:03:47,240 Speaker 1: grow margins at a faster pace. Just even last year, 75 00:03:47,280 --> 00:03:50,040 Speaker 1: we expanded our margins in the fourth quarter by three 76 00:03:50,080 --> 00:03:51,040 Speaker 1: hundred basis points. 77 00:03:51,320 --> 00:03:53,440 Speaker 3: So I've never had Shakeshack, but it looked I know, 78 00:03:53,520 --> 00:03:55,120 Speaker 3: I know, but it looks like I may be able 79 00:03:55,160 --> 00:03:55,960 Speaker 3: to now in Delta. 80 00:03:56,200 --> 00:03:56,400 Speaker 1: Yeah. 81 00:03:56,600 --> 00:03:59,440 Speaker 3: So, and this really also goes to your expansion plans. 82 00:03:59,600 --> 00:04:03,720 Speaker 3: Delta's to offer Shakeshack Burgers on additional domestic roots this year, 83 00:04:03,760 --> 00:04:06,680 Speaker 3: and that could expand international flights next year. Talk about 84 00:04:06,680 --> 00:04:07,840 Speaker 3: these expansion kind of plans. 85 00:04:07,920 --> 00:04:10,040 Speaker 1: Yeah, I mean, if you look at Delta at its 86 00:04:10,040 --> 00:04:12,720 Speaker 1: core and what this does, you know, this is an 87 00:04:12,760 --> 00:04:16,599 Speaker 1: opportunity where we're able to surprise and delight our guests, 88 00:04:16,600 --> 00:04:19,039 Speaker 1: give them that thing that they weren't really expecting. You know, 89 00:04:19,080 --> 00:04:21,760 Speaker 1: you have your expectation for what airline food is like, 90 00:04:22,360 --> 00:04:25,400 Speaker 1: and you know, this this opportunity to get a shake 91 00:04:25,440 --> 00:04:28,920 Speaker 1: Shack Burger and are great. We have a special brownie 92 00:04:28,920 --> 00:04:32,600 Speaker 1: that we've made for for Delta as well through this program. 93 00:04:33,120 --> 00:04:36,000 Speaker 1: People are just absolutely elated at the opportunity to have 94 00:04:36,080 --> 00:04:38,560 Speaker 1: that on their flights, and so much so that it's 95 00:04:38,600 --> 00:04:42,120 Speaker 1: exceeded our internal expectations. We're rolling it out to more airports. 96 00:04:42,160 --> 00:04:44,440 Speaker 1: You're gonna be able to get it, you know, New York, Atlanta, 97 00:04:45,120 --> 00:04:47,520 Speaker 1: a number of airports, and that will just you know, 98 00:04:47,600 --> 00:04:50,719 Speaker 1: probably continue to grow. And you know, if you look 99 00:04:50,720 --> 00:04:53,559 Speaker 1: at that opportunity and I can make so many different 100 00:04:53,640 --> 00:04:58,280 Speaker 1: parallels to how we've gone into an area where the 101 00:04:58,320 --> 00:05:01,760 Speaker 1: consumer had a certain expt actation and we just really 102 00:05:01,880 --> 00:05:04,400 Speaker 1: raised the bar on it and out punched above our 103 00:05:04,440 --> 00:05:08,440 Speaker 1: weight and transformed what people were expecting from you know, 104 00:05:08,800 --> 00:05:14,679 Speaker 1: it's airline food, if it's roadside food, and across the board, Katie, 105 00:05:14,800 --> 00:05:16,880 Speaker 1: in terms of growth, how many locations do you have 106 00:05:16,960 --> 00:05:19,920 Speaker 1: today and what's your outlook for the next year or two. Yeah, 107 00:05:19,960 --> 00:05:23,159 Speaker 1: we have you know, across both our company operated and 108 00:05:23,520 --> 00:05:27,040 Speaker 1: our license business, we're you know, about five hundred and 109 00:05:27,120 --> 00:05:30,240 Speaker 1: fifty five hundred and seventy locations, but we are growing 110 00:05:30,360 --> 00:05:34,359 Speaker 1: very fast. We're going to add another forty five domestic 111 00:05:34,440 --> 00:05:37,960 Speaker 1: company operated shacks this year, and we're going to open 112 00:05:38,000 --> 00:05:41,920 Speaker 1: about thirty five to forty licensed shacks as well. Those 113 00:05:41,960 --> 00:05:45,920 Speaker 1: license shacks are ones that we operate, that our partners operate. 114 00:05:47,120 --> 00:05:49,680 Speaker 1: We have locations in the US, but most of that 115 00:05:49,800 --> 00:05:53,360 Speaker 1: is kind of outside of the US and Asia, and 116 00:05:53,520 --> 00:05:57,159 Speaker 1: we have UK, the Middle East, Mexico, and most recently 117 00:05:57,200 --> 00:05:58,279 Speaker 1: we opened up in Canada. 118 00:05:58,880 --> 00:06:00,640 Speaker 3: Well, great stuff. We really appreciate it. We know you 119 00:06:00,640 --> 00:06:03,159 Speaker 3: got to run, Katie. Thank you very much. Next time snacks. 120 00:06:03,400 --> 00:06:06,240 Speaker 3: Katie Boogerty, chief financial Officer at Shake Shack.