Speaker 1: Bloomberg Audio Studios, podcasts, radio News.
Speaker 2: Joining us now at the conference on site is Katie Fogerty,
Speaker 2: chief financial officer of Shakeshack. Katie, thanks so much for
Speaker 2: joining us here. Love to get a sense of everybody's
Speaker 2: talking about Harris and what it might do to economic growth,
Speaker 2: what it might do to the consumer. Who is the
Speaker 2: consumer shakescheck, and what is that consumer telling you these days?
Speaker 1: Great? So you know who we think of as our consumer.
Speaker 1: We have you know, went out there and we have
Speaker 1: this amazing real estate strategy, real estate strategy, and what
Speaker 1: we've done is we've put these great community gathering places
Speaker 1: in a lot of these you know, great communities, and
Speaker 1: where we have attracted is just really kind of more
Speaker 1: of a I would say, you know, more a middle
Speaker 1: income to higher income guests. And we've seen that guest
Speaker 1: be able to weather a lot more of the economic
Speaker 1: headwinds than other you know, then the low income consumer
Speaker 1: has been facing. And you know what we continue to
Speaker 1: see is by leaning into our strength, which is delivering
Speaker 1: a fine casual experience. So we think about kind of
Speaker 1: bringing all those great guts of fine dining, elevated food,
Speaker 1: premium ingredients, doing the things that you know, other you know,
Speaker 1: Fast casual and QSR just are not willing to do.
Speaker 1: Putting that in an amazing hospital or hospitable environment and getting
Speaker 1: great guest service. That together has been a winning formula
Speaker 1: to help us outpunch what has been you know, some
Speaker 1: consumer headwinds that has been facing the industry, and we
Speaker 1: are going to continue to lean into that. It's it's
Speaker 1: helping us to differentiate and kind of pull apart from
Speaker 1: the pack. And it's it's been our strength. Where are
Speaker 1: our samples? I know, I mean what is this about?
Speaker 3: You know, who doesn't want to burger at ten am
Speaker 3: on a Wednesday close to open? So who are your
Speaker 3: competitors then? So if you're a middle and high end consumer,
Speaker 3: who would you.
Speaker 1: Say as a competitor, Yeah, I mean we sell burgers, shakes, fries,
Speaker 1: I think the best chicken sandwich out there in the business.
Speaker 1: We view our competitors as being you know, anybody who
Speaker 1: you know you might consider having lunch at or dinner at.
Speaker 1: So that is a pretty wide array, and it also
Speaker 1: can be you know, food at home. I mean that
Speaker 1: can also be in you know, in an area where
Speaker 1: you would have some share of stomach. So you know,
Speaker 1: for the vast amount of you know, of our restaurants
Speaker 1: out there, we are competing with a lot of people.
Speaker 1: Now we are differentiated and we are kind of in
Speaker 1: that category of one in the fine casual sector. But
Speaker 1: at the same time we know that, you know, people
Speaker 1: have lots of different options where they can go out
Speaker 1: to eat, Katy.
Speaker 2: There's a lot of concern out there about inflation. If
Speaker 2: inflation were to come into your business, where would you
Speaker 2: see it and how do you plan for that?
Speaker 1: So we actually have been navigating through inflationary pressures for
Speaker 1: a number of years here and doing so quite successfully.
Speaker 1: I'll say, you know, we've had wage inflationary pressures in COVID.
Speaker 1: It was actually very hard to get restaurant talent in
Speaker 1: our restaurants to staff and to deliver our food. It
Speaker 1: was not a desirable job at the time. And we
Speaker 1: had we raised wages and had a very competitive and
Speaker 1: compelling opportunity for our team members. We also introduced tips
Speaker 1: as a way to compensate our team members as well
Speaker 1: and give them added benefit. And then last year with
Speaker 1: you know, with California Fast Food Wage Act, you know,
Speaker 1: we faced through that as well. We've also had on
Speaker 1: the food side, you know, inflationary pressures that have been
Speaker 1: we've been navigating for a number of years as well.
Speaker 1: But through all of this, through leaning in on our strength,
Speaker 1: which is you know, again delivering that elevated you know,
Speaker 1: experience to guests, giving them that you know, twenty five dollars, uh,
Speaker 1: you know black truffle burger that we were actually selling
Speaker 1: for ten dollars and giving them that great value. On
Speaker 1: that side, we've been able to both grow sales and
Speaker 1: grow margins at a faster pace. Just even last year,
Speaker 1: we expanded our margins in the fourth quarter by three
Speaker 1: hundred basis points.
Speaker 3: So I've never had Shakeshack, but it looked I know,
Speaker 3: I know, but it looks like I may be able
Speaker 3: to now in Delta.
Speaker 1: Yeah.
Speaker 3: So, and this really also goes to your expansion plans.
Speaker 3: Delta's to offer Shakeshack Burgers on additional domestic roots this year,
Speaker 3: and that could expand international flights next year. Talk about
Speaker 3: these expansion kind of plans.
Speaker 1: Yeah, I mean, if you look at Delta at its
Speaker 1: core and what this does, you know, this is an
Speaker 1: opportunity where we're able to surprise and delight our guests,
Speaker 1: give them that thing that they weren't really expecting. You know,
Speaker 1: you have your expectation for what airline food is like,
Speaker 1: and you know, this this opportunity to get a shake
Speaker 1: Shack Burger and are great. We have a special brownie
Speaker 1: that we've made for for Delta as well through this program.
Speaker 1: People are just absolutely elated at the opportunity to have
Speaker 1: that on their flights, and so much so that it's
Speaker 1: exceeded our internal expectations. We're rolling it out to more airports.
Speaker 1: You're gonna be able to get it, you know, New York, Atlanta,
Speaker 1: a number of airports, and that will just you know,
Speaker 1: probably continue to grow. And you know, if you look
Speaker 1: at that opportunity and I can make so many different
Speaker 1: parallels to how we've gone into an area where the
Speaker 1: consumer had a certain expt actation and we just really
Speaker 1: raised the bar on it and out punched above our
Speaker 1: weight and transformed what people were expecting from you know,
Speaker 1: it's airline food, if it's roadside food, and across the board, Katie,
Speaker 1: in terms of growth, how many locations do you have
Speaker 1: today and what's your outlook for the next year or two. Yeah,
Speaker 1: we have you know, across both our company operated and
Speaker 1: our license business, we're you know, about five hundred and
Speaker 1: fifty five hundred and seventy locations, but we are growing
Speaker 1: very fast. We're going to add another forty five domestic
Speaker 1: company operated shacks this year, and we're going to open
Speaker 1: about thirty five to forty licensed shacks as well. Those
Speaker 1: license shacks are ones that we operate, that our partners operate.
Speaker 1: We have locations in the US, but most of that
Speaker 1: is kind of outside of the US and Asia, and
Speaker 1: we have UK, the Middle East, Mexico, and most recently
Speaker 1: we opened up in Canada.
Speaker 3: Well, great stuff. We really appreciate it. We know you
Speaker 3: got to run, Katie. Thank you very much. Next time snacks.
Speaker 3: Katie Boogerty, chief financial Officer at Shake Shack.