1
00:00:03,680 --> 00:00:07,200
Speaker 1: Shake Shack was looking to hire a new chief financial officer.

2
00:00:07,880 --> 00:00:10,760
Speaker 1: Fast casual restaurant chain found the perfect candidate in an

3
00:00:10,840 --> 00:00:15,880
Speaker 1: unexpected place, Wall Street. I had worked at Coleman Sachs

4
00:00:15,960 --> 00:00:19,080
Speaker 1: for about sixteen years. I was covering the restaurant in Factor.

5
00:00:19,280 --> 00:00:21,360
Speaker 1: Katie and I worked together for a long time. She

6
00:00:21,520 --> 00:00:24,040
Speaker 1: was an analyst covering our stock. The day that I

7
00:00:24,079 --> 00:00:26,360
Speaker 1: knew I was looking for a new CFO, the day

8
00:00:26,360 --> 00:00:29,000
Speaker 1: that I announced it, I went to our recruiter and

9
00:00:29,040 --> 00:00:31,760
Speaker 1: I said, what about Katie foger I remember working with her?

10
00:00:32,360 --> 00:00:35,120
Speaker 1: Do you think she might be interesting this? That same day,

11
00:00:35,560 --> 00:00:37,840
Speaker 1: she had heard about it and went to her family

12
00:00:37,880 --> 00:00:40,360
Speaker 1: and said, this is the job I want. Literally that

13
00:00:40,440 --> 00:00:42,680
Speaker 1: same day. It was something that you know, I always

14
00:00:42,760 --> 00:00:44,919
Speaker 1: wanted to take a more of a leadership role at

15
00:00:44,920 --> 00:00:48,360
Speaker 1: a company. We hit it off. Katie Fogerty spent the

16
00:00:48,360 --> 00:00:52,080
Speaker 1: first part of her career asking hard questions about corporate strategy.

17
00:00:52,440 --> 00:00:55,960
Speaker 1: Now she's responsible for answers. I think that there's a

18
00:00:56,040 --> 00:00:58,560
Speaker 1: number of things that a cell side research analyst can

19
00:00:58,680 --> 00:01:01,040
Speaker 1: lend to a company, especially to a company that is

20
00:01:01,040 --> 00:01:03,920
Speaker 1: in you know, high growth mode. One. It's just really

21
00:01:04,240 --> 00:01:08,280
Speaker 1: a very firm, you know, ability to analyze strategic decisions,

22
00:01:08,440 --> 00:01:11,360
Speaker 1: um to really get into the numbers, into the models,

23
00:01:11,400 --> 00:01:15,280
Speaker 1: and to have a firm view of different scenarios out there.

24
00:01:15,520 --> 00:01:20,600
Speaker 1: When those Wall Street executives move into the company seat,

25
00:01:20,720 --> 00:01:25,120
Speaker 1: they bring an understanding, hopefully of the fundamentals company sector,

26
00:01:25,720 --> 00:01:27,679
Speaker 1: but also what it means to be a stock. The

27
00:01:27,760 --> 00:01:33,120
Speaker 1: total stakeholder perspective includes shareholders. How are we measuring the

28
00:01:33,120 --> 00:01:37,600
Speaker 1: incrementality of a great offer like this? Katie's skill set

29
00:01:37,720 --> 00:01:41,080
Speaker 1: so uniquely is able to harvest in her mind so

30
00:01:41,160 --> 00:01:46,240
Speaker 1: much data and information turn it quickly into tremendous insights

31
00:01:46,640 --> 00:01:49,240
Speaker 1: that end up driving our strategic priorities. That is her

32
00:01:49,280 --> 00:01:51,919
Speaker 1: sweet spot. I look at a CFO from Wall Street

33
00:01:52,160 --> 00:01:56,600
Speaker 1: as someone who can bring a breath of fresh air

34
00:01:57,440 --> 00:02:01,280
Speaker 1: to a business that often can become very in brid

35
00:02:01,520 --> 00:02:06,160
Speaker 1: They're extremely grounded in data, They're curious about data, They're

36
00:02:06,160 --> 00:02:08,600
Speaker 1: pushing the data. They know what to do with the

37
00:02:08,760 --> 00:02:12,160
Speaker 1: data and tie that into telling the story. There's a

38
00:02:12,160 --> 00:02:14,839
Speaker 1: reality check that Katie brings to the business to say,

39
00:02:14,840 --> 00:02:16,000
Speaker 1: you know, and I know, I think, I know you

40
00:02:16,160 --> 00:02:18,680
Speaker 1: think this, but let me tell you what the data

41
00:02:18,720 --> 00:02:22,200
Speaker 1: is really telling us here. She's still looking at data

42
00:02:22,280 --> 00:02:24,960
Speaker 1: to predict the future. Only now she's taking it a

43
00:02:25,000 --> 00:02:27,440
Speaker 1: step further. Before it was a lot of kind of

44
00:02:27,440 --> 00:02:30,960
Speaker 1: sitting almost in an armchair type basis and and and

45
00:02:31,080 --> 00:02:34,400
Speaker 1: analyzing different and now, you know, pieces of information to

46
00:02:34,520 --> 00:02:37,360
Speaker 1: see where I thought the best investment dollar would be allocated.

47
00:02:37,720 --> 00:02:41,360
Speaker 1: Here it is actually driving a plan of how we

48
00:02:41,440 --> 00:02:46,520
Speaker 1: can best maximize shareholder returns. It is about leveraging data analytics,

49
00:02:46,680 --> 00:02:49,880
Speaker 1: driving real insights through you know, not just your own

50
00:02:49,919 --> 00:02:53,600
Speaker 1: guest data, but leveraging statistical models UM and and really

51
00:02:53,639 --> 00:02:57,639
Speaker 1: kind of figuring out where the best strategic decisions will

52
00:02:57,720 --> 00:03:00,400
Speaker 1: be made over time. This is an industry that really

53
00:03:00,480 --> 00:03:03,799
Speaker 1: needs that type of analysis. That helped the Strategic vision

54
00:03:04,320 --> 00:03:06,640
Speaker 1: UM now more than ever, and so it was incredibly

55
00:03:06,680 --> 00:03:09,680
Speaker 1: exciting to start to apply that here at shake Shack.

56
00:03:22,919 --> 00:03:25,359
Speaker 1: Shake Shack began as a humble hot dog card in

57
00:03:25,440 --> 00:03:28,720
Speaker 1: New York's Madison Square Park. It opened his first restaurant

58
00:03:28,760 --> 00:03:31,079
Speaker 1: as a kiosk in that park in two thousand four.

59
00:03:31,400 --> 00:03:33,840
Speaker 1: A decade later, there were more than sixty shake Shack

60
00:03:33,919 --> 00:03:37,040
Speaker 1: restaurants around the world, and in early two thousand fifteen,

61
00:03:37,200 --> 00:03:41,640
Speaker 1: the company went public. At the end of one shake

62
00:03:41,680 --> 00:03:45,360
Speaker 1: Shack and its licensed partners operated nearly four hundred locations

63
00:03:45,400 --> 00:03:49,000
Speaker 1: and sixteen countries. At least sixty more are expected to

64
00:03:49,000 --> 00:03:52,160
Speaker 1: open by the end of We always feel like we're

65
00:03:52,160 --> 00:03:54,200
Speaker 1: just getting started at shake Shack somehow, you know. We

66
00:03:54,280 --> 00:03:57,080
Speaker 1: kind of describe ourselves as a public startup. We have

67
00:03:57,160 --> 00:04:00,600
Speaker 1: a huge footprint and white space out there that we

68
00:04:00,640 --> 00:04:03,280
Speaker 1: can grow globally, and we're going to continue to do that.

69
00:04:03,640 --> 00:04:06,400
Speaker 1: The pace of expansion is nothing new for this company,

70
00:04:06,680 --> 00:04:10,320
Speaker 1: but maybe different is the shape. Shake Shack has thrived

71
00:04:10,360 --> 00:04:15,040
Speaker 1: in high density urban locations, which provided revenues before the

72
00:04:15,080 --> 00:04:19,599
Speaker 1: pandemic but returned to office patterns during COVID have been unpredictable,

73
00:04:19,920 --> 00:04:23,520
Speaker 1: hampering sales growth in cities. Now shake Shack is exploring

74
00:04:23,560 --> 00:04:27,600
Speaker 1: new formats as it extends its footprint in suburbs. This

75
00:04:27,680 --> 00:04:30,360
Speaker 1: is not just a reaction to COVID. This is the

76
00:04:30,440 --> 00:04:32,520
Speaker 1: stuff that we've been working on before. What COVID did

77
00:04:32,960 --> 00:04:37,000
Speaker 1: was accelerated the pace and excitement. Frankly, for some of

78
00:04:37,000 --> 00:04:39,680
Speaker 1: the things that we've been planning before, drive through amongst

79
00:04:39,720 --> 00:04:42,120
Speaker 1: them as the most important. We were right at a

80
00:04:42,160 --> 00:04:45,440
Speaker 1: pivotal moment of thinking drive throughs were obsolete, and then

81
00:04:45,520 --> 00:04:47,839
Speaker 1: COVID hit and it was a saving grace. When you

82
00:04:47,880 --> 00:04:51,800
Speaker 1: get out into the suburban areas, drive in becomes incredibly

83
00:04:51,839 --> 00:04:56,159
Speaker 1: important because that's convenience and if a significant percentage of

84
00:04:56,200 --> 00:04:59,400
Speaker 1: your businesses drive up, you need a smaller facility so

85
00:04:59,640 --> 00:05:02,640
Speaker 1: the can be smaller. This is the first time the

86
00:05:02,640 --> 00:05:05,080
Speaker 1: company has ever you know, put in and drive through.

87
00:05:05,120 --> 00:05:07,240
Speaker 1: We opened up our first one in December of last year.

88
00:05:07,520 --> 00:05:12,359
Speaker 1: We have six open, very exciting stuff. Drive through lanes

89
00:05:12,400 --> 00:05:15,840
Speaker 1: offer long term opportunities to build revenue and increase margins,

90
00:05:16,200 --> 00:05:19,440
Speaker 1: but right now they carry a higher price tag. Overall,

91
00:05:19,560 --> 00:05:22,400
Speaker 1: we've seen an you know, arise in our build costs.

92
00:05:22,480 --> 00:05:25,000
Speaker 1: We talked about ten to fifteen percent higher build costs

93
00:05:25,000 --> 00:05:27,839
Speaker 1: across the board. Things are just costing more um. It

94
00:05:27,880 --> 00:05:31,320
Speaker 1: makes site selection ever more important. It makes all of

95
00:05:31,360 --> 00:05:33,200
Speaker 1: the work that we do in real estate and that

96
00:05:33,240 --> 00:05:37,200
Speaker 1: whole process, you know, incredibly more important. Since Katie Fogerty

97
00:05:37,200 --> 00:05:41,360
Speaker 1: became CFO of shake Shack in June, inflation has risen

98
00:05:41,400 --> 00:05:44,719
Speaker 1: at a record rate, making her job that much harder.

99
00:05:44,960 --> 00:05:49,320
Speaker 1: Everything that enters our business, commodities, foods, cost of building

100
00:05:49,320 --> 00:05:52,960
Speaker 1: restaurants is getting more expensive. I don't see that ending

101
00:05:53,200 --> 00:05:56,039
Speaker 1: anytime soon. How that We've got to continue to plan

102
00:05:56,160 --> 00:05:57,720
Speaker 1: for it. And if you look at the price of beef,

103
00:05:57,800 --> 00:06:00,200
Speaker 1: if you look at the price of dairy eggs, of

104
00:06:00,240 --> 00:06:03,479
Speaker 1: these core things in paper and packaging, it's just meaning

105
00:06:03,480 --> 00:06:06,560
Speaker 1: that everything costs us more and more and more. And

106
00:06:06,600 --> 00:06:09,200
Speaker 1: we're not alone. This is happening to the entire industry

107
00:06:09,320 --> 00:06:12,440
Speaker 1: right now. The industry is also dealing with a sea

108
00:06:12,560 --> 00:06:16,279
Speaker 1: change on the labor front. Hourly wages have soared and

109
00:06:16,320 --> 00:06:20,239
Speaker 1: the Great resignation has hit restaurants hard. Labor costs aren't

110
00:06:20,240 --> 00:06:23,080
Speaker 1: going down because of the training and turnover at the

111
00:06:23,080 --> 00:06:26,200
Speaker 1: thirty sixty and ninety d mark. UM. If someone you

112
00:06:26,200 --> 00:06:28,440
Speaker 1: know can even figure the job out, do they stay?

113
00:06:28,680 --> 00:06:32,520
Speaker 1: And and that's still not under control whatsoever. UM. So,

114
00:06:32,600 --> 00:06:37,080
Speaker 1: while maybe like the actual wage inflation can taper, turnover

115
00:06:37,120 --> 00:06:41,280
Speaker 1: and training costs are still elevated. We've invested more than

116
00:06:41,360 --> 00:06:43,680
Speaker 1: ten million dollars in our employees over the past year

117
00:06:43,720 --> 00:06:46,800
Speaker 1: and we're gonna continue to invest more. We're testing four

118
00:06:46,880 --> 00:06:49,760
Speaker 1: day work weeks to help you, especially our working parents,

119
00:06:49,839 --> 00:06:52,919
Speaker 1: kind of juggle that balance between childcare and your work.

120
00:06:53,279 --> 00:06:54,880
Speaker 1: I know I deal with that all the time. This

121
00:06:54,960 --> 00:06:57,600
Speaker 1: is really a people first company. UM. In the even

122
00:06:57,760 --> 00:07:00,159
Speaker 1: an inflationary environment, you're going to see us contain you

123
00:07:00,240 --> 00:07:02,960
Speaker 1: to lead with our people. Do you worry at all

124
00:07:03,000 --> 00:07:06,120
Speaker 1: of that a price wage spiral not just here but

125
00:07:06,320 --> 00:07:08,640
Speaker 1: in the industry, in the economy, Yes, And I think

126
00:07:08,680 --> 00:07:10,920
Speaker 1: that you know this is is something that you know

127
00:07:11,320 --> 00:07:15,640
Speaker 1: many business leaders are focused on um and you know

128
00:07:15,720 --> 00:07:18,600
Speaker 1: time will tell kind of how all of this lands.

129
00:07:18,640 --> 00:07:21,400
Speaker 1: I think the wage probace spiral continues for quite some time,

130
00:07:21,400 --> 00:07:23,840
Speaker 1: and I think we probably have been a lot less

131
00:07:23,840 --> 00:07:27,880
Speaker 1: aggressive than we can be, and then many other companies

132
00:07:27,880 --> 00:07:30,320
Speaker 1: have been in terms of raising crisis. We've taken our time.

133
00:07:30,360 --> 00:07:32,240
Speaker 1: If you look at a twenty year history of pricing

134
00:07:32,240 --> 00:07:34,600
Speaker 1: in this company, we've taken about two percent a year

135
00:07:34,640 --> 00:07:38,080
Speaker 1: on average. We've never taken what we could. We've always

136
00:07:38,080 --> 00:07:40,320
Speaker 1: taken what we should. We have to pay people more.

137
00:07:40,640 --> 00:07:43,040
Speaker 1: We have been and we'll continue to do so. We'll

138
00:07:43,160 --> 00:07:45,320
Speaker 1: take a little bit of a margin compression on that

139
00:07:45,360 --> 00:07:47,600
Speaker 1: as we've had to, and I think that's the right

140
00:07:47,680 --> 00:07:50,520
Speaker 1: thing so that for the long term, shake Chack continues

141
00:07:50,600 --> 00:07:53,600
Speaker 1: to be what we're building, which is the next generations

142
00:07:53,600 --> 00:07:57,400
Speaker 1: burger joint. Shake Jack margins have come down from pre

143
00:07:57,520 --> 00:08:00,200
Speaker 1: pandemic levels at the same time, the companies can act.

144
00:08:00,280 --> 00:08:04,320
Speaker 1: Position has improved during COVID. We actually took two opportunities

145
00:08:04,480 --> 00:08:06,720
Speaker 1: to raise capital. We have a fortress balance sheet like

146
00:08:06,720 --> 00:08:09,880
Speaker 1: we've never had before. Good timing, good planning. So when

147
00:08:09,920 --> 00:08:12,120
Speaker 1: we use that money, we're looking for a great return.

148
00:08:12,280 --> 00:08:14,840
Speaker 1: The area with the highest potential return is right in

149
00:08:14,960 --> 00:08:20,520
Speaker 1: Katie Filgrity's wheelhouse, advancing Shake Shacks digital transformation. It's amazing

150
00:08:20,640 --> 00:08:22,960
Speaker 1: to sit here and think that this is a company

151
00:08:23,000 --> 00:08:25,760
Speaker 1: that had essentially hardly any digital sales prior to the

152
00:08:25,760 --> 00:08:29,200
Speaker 1: pandemic um And when the pandemic hit, we went full

153
00:08:29,240 --> 00:08:32,200
Speaker 1: force on digital with the app, web, with third party

154
00:08:32,240 --> 00:08:34,880
Speaker 1: delivery um And here we are now with you know,

155
00:08:35,960 --> 00:08:39,560
Speaker 1: of our sales still coming from digital channels, even as

156
00:08:39,600 --> 00:08:42,520
Speaker 1: our in shack business has doesn't count the kiosks, right,

157
00:08:42,679 --> 00:08:45,120
Speaker 1: that does not count the kiosk When what kind of

158
00:08:45,120 --> 00:08:47,120
Speaker 1: investment was that? Was it a home run? Is that

159
00:08:47,240 --> 00:08:50,600
Speaker 1: something where you're like, Randy, this paid off big time? Well,

160
00:08:50,880 --> 00:08:52,719
Speaker 1: it's something that we continue to invest in and we

161
00:08:52,880 --> 00:08:56,240
Speaker 1: continue to see opportunities to improve our app, improve that

162
00:08:56,280 --> 00:08:59,840
Speaker 1: guest experience, improve you know, the ways that we're incentive

163
00:08:59,840 --> 00:09:03,440
Speaker 1: by using our guests to really lean into our digital channels.

164
00:09:03,480 --> 00:09:05,280
Speaker 1: If you simply, you know, kind of look at what

165
00:09:05,440 --> 00:09:09,080
Speaker 1: the higher frequency we get from those digital guests, moving

166
00:09:09,080 --> 00:09:11,960
Speaker 1: more and more of them into the channels, and continuing

167
00:09:12,000 --> 00:09:15,200
Speaker 1: to invest to drive frequency of that base. It's a

168
00:09:15,320 --> 00:09:20,000
Speaker 1: really good recipe for strong long term traffic growth. From

169
00:09:20,040 --> 00:09:23,160
Speaker 1: its early days as a kiosk in Manhattan's Madison Square Park,

170
00:09:23,360 --> 00:09:27,440
Speaker 1: Shake Shack's brand has combined simplicity and style. The menu

171
00:09:27,520 --> 00:09:31,199
Speaker 1: features classic items with a creative twist, while the ingredients

172
00:09:31,200 --> 00:09:34,280
Speaker 1: and service are a significant step up from fast food.

173
00:09:35,480 --> 00:09:39,080
Speaker 1: The concept was an instant success, but maintaining growth and

174
00:09:39,240 --> 00:09:43,280
Speaker 1: staying relevant comes to the complex set of pressures. We've

175
00:09:43,480 --> 00:09:47,280
Speaker 1: come out of the pandemic with a new world and

176
00:09:47,840 --> 00:09:51,720
Speaker 1: where something that might have been an evolutionary change has

177
00:09:51,800 --> 00:09:54,679
Speaker 1: been a revolutionary change. We've made changes to the way

178
00:09:54,720 --> 00:09:57,320
Speaker 1: we eat, We've made changes to the way we operate

179
00:09:57,640 --> 00:10:02,400
Speaker 1: that might have taken years have been compressed into months

180
00:10:02,400 --> 00:10:05,400
Speaker 1: and days. The role of CFO in a company like

181
00:10:05,480 --> 00:10:08,800
Speaker 1: ours that's so dynamically growing, so constantly changing and focus

182
00:10:08,880 --> 00:10:12,079
Speaker 1: on digital is critical. Katie plays such an amazing role there.

183
00:10:12,120 --> 00:10:15,280
Speaker 1: She's not just moving numbers around, you know, this is

184
00:10:15,280 --> 00:10:21,199
Speaker 1: not your grandfather's CFO anymore. The digital infrastructure, the way

185
00:10:21,240 --> 00:10:24,520
Speaker 1: we think about things now, is a monster that needs

186
00:10:24,520 --> 00:10:27,760
Speaker 1: to be fed all day long, every day and is

187
00:10:27,800 --> 00:10:31,360
Speaker 1: always hungry. And you could probably have a hundred and

188
00:10:31,360 --> 00:10:35,360
Speaker 1: fifty digital priorities today that all our teams will fight about.

189
00:10:35,440 --> 00:10:38,880
Speaker 1: Ops wants this, tech wants this, Marketing wants this, I

190
00:10:38,920 --> 00:10:43,040
Speaker 1: want this, Katie wants that. Katie's job is to take

191
00:10:43,160 --> 00:10:48,400
Speaker 1: all that prioritization, think it through, understand which one is

192
00:10:48,400 --> 00:10:50,280
Speaker 1: going to have the best return on capital and which

193
00:10:50,280 --> 00:10:52,520
Speaker 1: ones have no return on capital, and you still got

194
00:10:52,520 --> 00:10:54,839
Speaker 1: to do them anyway. That's the reality of the world

195
00:10:54,880 --> 00:10:58,080
Speaker 1: we live in right now, and it's it's critical to

196
00:10:58,320 --> 00:11:01,560
Speaker 1: lead that in the right way. I visited a Manhattan

197
00:11:01,600 --> 00:11:04,920
Speaker 1: Shack with Katie Fogerty. Our first stop inside the restaurant

198
00:11:05,040 --> 00:11:07,480
Speaker 1: was an order in Kiosk, and on the burger side,

199
00:11:07,480 --> 00:11:09,880
Speaker 1: you can see the option here for the bourbon bacon

200
00:11:10,360 --> 00:11:14,480
Speaker 1: jam burger with shallots on top, the avocado bacon burger,

201
00:11:14,480 --> 00:11:17,600
Speaker 1: as well our beloved smoke Shack. The Kiosks are an

202
00:11:17,640 --> 00:11:20,520
Speaker 1: investment in engagement. We just see a guess kind of

203
00:11:20,520 --> 00:11:23,280
Speaker 1: sit with the menu and really appreciate and understand how

204
00:11:23,320 --> 00:11:26,520
Speaker 1: they can customize their order or the different add ons

205
00:11:26,679 --> 00:11:28,680
Speaker 1: um that they have. So we really do believe that

206
00:11:28,720 --> 00:11:31,640
Speaker 1: this provides them with an even better experience than going

207
00:11:31,679 --> 00:11:34,439
Speaker 1: to the cash register. What's the payoff, I mean the

208
00:11:34,760 --> 00:11:36,679
Speaker 1: cost to put one of these in compared to how

209
00:11:36,760 --> 00:11:40,560
Speaker 1: much more a customer spends on the kiosk. We do

210
00:11:40,679 --> 00:11:43,040
Speaker 1: see a very nice lift off of the kiosk um

211
00:11:43,080 --> 00:11:45,640
Speaker 1: And actually this is not even uh, you know, very

212
00:11:45,679 --> 00:11:48,760
Speaker 1: fancy kiosk technology. It's an iPad, what has more investment

213
00:11:48,800 --> 00:11:51,560
Speaker 1: tied to it. It's just the constant innovasions that we've

214
00:11:51,600 --> 00:11:55,959
Speaker 1: had to make the kiosk functionality better and better. And

215
00:11:56,040 --> 00:11:58,880
Speaker 1: you know, we're driving towards kind of a parody situation

216
00:11:59,000 --> 00:12:02,160
Speaker 1: where the key us and the cash register have exactly

217
00:12:02,200 --> 00:12:05,559
Speaker 1: the same functionality, and we want the kiosks to be

218
00:12:05,600 --> 00:12:08,440
Speaker 1: able to identify who you are and what you like

219
00:12:08,520 --> 00:12:11,960
Speaker 1: to order when you come into the shack. Improvements like

220
00:12:12,040 --> 00:12:16,320
Speaker 1: these take resources shake shacks. General and administrative expenses have

221
00:12:16,520 --> 00:12:20,120
Speaker 1: risen as the companies put capital behind digital initiatives and

222
00:12:20,160 --> 00:12:23,559
Speaker 1: the changes ripple out from there. As our digital evolution

223
00:12:23,880 --> 00:12:26,240
Speaker 1: has been underway, we've had to make a number of

224
00:12:26,280 --> 00:12:29,720
Speaker 1: adjustments to the layout of our current existing shack base

225
00:12:30,080 --> 00:12:33,120
Speaker 1: and really rethink the flow of the shacks that we're

226
00:12:33,120 --> 00:12:36,679
Speaker 1: building in order to really capitalize and enable and let

227
00:12:36,679 --> 00:12:39,760
Speaker 1: our digital business thrive. And many shacks we've taken out

228
00:12:40,040 --> 00:12:42,800
Speaker 1: cash registers, We've moved them around. A lot of times

229
00:12:42,800 --> 00:12:45,280
Speaker 1: it's two or three cash registers that are just taken

230
00:12:45,280 --> 00:12:47,640
Speaker 1: down to one. We've had to really rethink the way

231
00:12:47,679 --> 00:12:50,320
Speaker 1: that the flow of our guest journey is in our shack.

232
00:12:50,440 --> 00:12:52,840
Speaker 1: So one perfect example of it is we put in

233
00:12:52,880 --> 00:12:56,360
Speaker 1: pickup shells here UM at most of our restaurants. Guests

234
00:12:56,360 --> 00:12:59,079
Speaker 1: who are looking for that to go experience can come

235
00:12:59,120 --> 00:13:00,560
Speaker 1: in and pick up the work her to go and

236
00:13:00,600 --> 00:13:02,800
Speaker 1: they don't have to sit there and wait with everybody

237
00:13:02,800 --> 00:13:05,640
Speaker 1: else who is who is waiting for their UM, you know,

238
00:13:05,720 --> 00:13:09,280
Speaker 1: food ready to be made. We are constantly monitoring UM

239
00:13:09,320 --> 00:13:12,679
Speaker 1: and identifying ways to be better in the kitchen UM

240
00:13:12,720 --> 00:13:15,079
Speaker 1: and it also goes down to the products and the

241
00:13:15,480 --> 00:13:18,200
Speaker 1: types of offerings that we have. You know, we never

242
00:13:18,240 --> 00:13:21,080
Speaker 1: want to have something that is going to overly complicate

243
00:13:21,080 --> 00:13:23,720
Speaker 1: our team member's journey. UM. We don't want to have

244
00:13:23,760 --> 00:13:26,560
Speaker 1: something that's going to slow us down operationally. So you'll

245
00:13:26,559 --> 00:13:28,040
Speaker 1: see a lot of our l t O is just

246
00:13:28,040 --> 00:13:31,600
Speaker 1: really be building for menu ingredients and allowing our teams

247
00:13:31,600 --> 00:13:33,600
Speaker 1: to kind of do a little bit, you know, different

248
00:13:33,640 --> 00:13:37,600
Speaker 1: with what we already have LTO stands for limited time offer.

249
00:13:37,880 --> 00:13:41,080
Speaker 1: It might be a special shake flavor, or partnerships like

250
00:13:41,120 --> 00:13:45,000
Speaker 1: a recent venture with distiller Maker's Mark. But Shakeshac's core

251
00:13:45,040 --> 00:13:48,120
Speaker 1: offering is the burger, and it's not just any burger.

252
00:13:48,200 --> 00:13:51,400
Speaker 1: The company pledges the source premium meat that's ethically raised

253
00:13:51,679 --> 00:13:55,040
Speaker 1: and cost more even when inflation is not at historic levels.

254
00:13:55,480 --> 00:13:58,040
Speaker 1: I've heard a lot about the importance of the quality

255
00:13:58,200 --> 00:14:01,200
Speaker 1: to you guys in terms of ingredients. Doesn't that get expensive,

256
00:14:01,280 --> 00:14:04,800
Speaker 1: especially right now? Quality beef must be uh, you know,

257
00:14:04,920 --> 00:14:08,520
Speaker 1: in rising rising in terms of price. I mean, we've

258
00:14:08,559 --> 00:14:11,720
Speaker 1: always used premium ingredients, and those premium ingredients they come

259
00:14:11,720 --> 00:14:13,880
Speaker 1: at a higher price. We always have an eye on

260
00:14:14,120 --> 00:14:16,520
Speaker 1: the margin um, but we know also at the end

261
00:14:16,559 --> 00:14:18,440
Speaker 1: of the day, you're running a very dangerous game. If

262
00:14:18,480 --> 00:14:22,120
Speaker 1: you're trying to reverse engineer into something that you know

263
00:14:22,200 --> 00:14:24,160
Speaker 1: you want from a p m L standpoint, the guests

264
00:14:24,240 --> 00:14:28,760
Speaker 1: might not like it. J Chack standing firm on quality.

265
00:14:29,080 --> 00:14:33,240
Speaker 1: It's also practicing transparency. Announcing plans to raise menu prices

266
00:14:33,280 --> 00:14:35,560
Speaker 1: by five to seven percent in the fourth quarter of

267
00:14:37,000 --> 00:14:41,480
Speaker 1: shake Shack is the best example the definition of a

268
00:14:41,520 --> 00:14:48,960
Speaker 1: fantastic value proposition. However, not all customers across this country

269
00:14:49,560 --> 00:14:52,640
Speaker 1: have you know, that change in their pocket to pay

270
00:14:52,680 --> 00:14:54,800
Speaker 1: for that average to get at lunch or dinner. And

271
00:14:54,840 --> 00:14:57,520
Speaker 1: I think they're very comfortable with that, and I think

272
00:14:57,560 --> 00:15:02,760
Speaker 1: it's very interesting and very different than what others are doing.

273
00:15:03,000 --> 00:15:05,240
Speaker 1: I mean, it is who they are. They're not trying

274
00:15:05,280 --> 00:15:07,560
Speaker 1: to escape it. They're not trying to be something they're not.

275
00:15:08,440 --> 00:15:10,320
Speaker 1: And the fact of the matter is if they picked

276
00:15:10,320 --> 00:15:12,880
Speaker 1: a different path, and it's fine, it would be hard

277
00:15:12,920 --> 00:15:17,720
Speaker 1: to pivot back. We are serving fresh home muscle hormone

278
00:15:17,720 --> 00:15:21,040
Speaker 1: antibiotic free beef. That is a totally different thing than

279
00:15:21,080 --> 00:15:24,240
Speaker 1: you're going to eat at nearly all other restaurants, certainly

280
00:15:24,400 --> 00:15:26,560
Speaker 1: traditional fast food, and you've got to pay more for that,

281
00:15:26,640 --> 00:15:29,000
Speaker 1: and you should want to. And when you see things

282
00:15:29,160 --> 00:15:33,400
Speaker 1: like ten for dollar or two for five dollars, we

283
00:15:33,560 --> 00:15:37,840
Speaker 1: can't do that because our ingredients cost more than that

284
00:15:37,920 --> 00:15:39,480
Speaker 1: to bring it to you, and you should want to

285
00:15:39,520 --> 00:15:42,160
Speaker 1: pay more for that. And frankly, who am I to

286
00:15:42,280 --> 00:15:46,360
Speaker 1: argue from still crunchy to big until crunchy. I like that,

287
00:15:46,560 --> 00:15:54,040
Speaker 1: it's delicious. I might finish this. Nearly of Shakeshack locations

288
00:15:54,120 --> 00:15:57,480
Speaker 1: in the US, our company operated around the world. It's

289
00:15:57,520 --> 00:16:01,400
Speaker 1: a different story. The business has grown internationally by working

290
00:16:01,400 --> 00:16:04,960
Speaker 1: with licensed partners to operate restaurants. That's a trend they

291
00:16:04,960 --> 00:16:08,080
Speaker 1: intend to keep going. Today we have shake Jacks in

292
00:16:08,200 --> 00:16:12,560
Speaker 1: sixteen countries everywhere from China to Singapore, to the Philippines

293
00:16:12,920 --> 00:16:15,920
Speaker 1: to London and beyond. We see it. There's a huge

294
00:16:15,920 --> 00:16:20,000
Speaker 1: white space opportunity for US. Many restaurant brands struggle to

295
00:16:20,160 --> 00:16:23,640
Speaker 1: move outside of their own core market in the United States.

296
00:16:23,960 --> 00:16:26,440
Speaker 1: Perhaps it's something that's very New England, and when they

297
00:16:26,440 --> 00:16:28,680
Speaker 1: try to move outside of the New England area, guest

298
00:16:28,720 --> 00:16:31,280
Speaker 1: reception is just not there. Or it's a West Coast

299
00:16:31,280 --> 00:16:34,920
Speaker 1: brand that takes fifty years to bleed across the country.

300
00:16:35,160 --> 00:16:37,800
Speaker 1: The thing about shake Shack and the magic about it

301
00:16:37,880 --> 00:16:40,640
Speaker 1: is this is a company that can sit here with

302
00:16:40,760 --> 00:16:45,320
Speaker 1: only two hundred restaurants in the US today, open up

303
00:16:45,360 --> 00:16:48,760
Speaker 1: one in a Tier two city in China and the

304
00:16:49,040 --> 00:16:53,040
Speaker 1: guest reception for that restaurant is mind blowing. These are

305
00:16:53,040 --> 00:16:56,320
Speaker 1: some of the largest opens that we've ever had. We

306
00:16:56,360 --> 00:16:59,000
Speaker 1: have big plans for our licensed business. It's a really

307
00:16:59,120 --> 00:17:02,320
Speaker 1: asset light ashecretive business for us. We love it and

308
00:17:02,440 --> 00:17:04,440
Speaker 1: we love it when our partners overseas make a ton

309
00:17:04,440 --> 00:17:06,480
Speaker 1: of money because they're gonna build more restaurants. We're gonna

310
00:17:06,480 --> 00:17:09,080
Speaker 1: all continue to grow. I mean, there's so many opportunities

311
00:17:09,119 --> 00:17:12,680
Speaker 1: for us to add to our licensed business. And certainly

312
00:17:12,920 --> 00:17:15,480
Speaker 1: I get so many text messages from people traveling the

313
00:17:15,520 --> 00:17:18,280
Speaker 1: world if there is a shake Shack there, guess which

314
00:17:18,320 --> 00:17:20,480
Speaker 1: one this one is? And if there's not one, why

315
00:17:20,480 --> 00:17:23,399
Speaker 1: don't you have one here? The first shake Shack in

316
00:17:23,480 --> 00:17:26,239
Speaker 1: mainland China open in two thousand nineteen, and there are

317
00:17:26,280 --> 00:17:30,080
Speaker 1: now more than twenty. Although the government zero COVID policy

318
00:17:30,119 --> 00:17:33,159
Speaker 1: has weighed on revenues, the company is committed to expanding

319
00:17:33,160 --> 00:17:36,880
Speaker 1: its presence. China is a fascinating business for us. It's

320
00:17:36,880 --> 00:17:39,920
Speaker 1: it's one of the most exciting, biggest opportunity to Shapshack

321
00:17:39,960 --> 00:17:42,800
Speaker 1: has over the initial a couple of years of the pandemic,

322
00:17:43,240 --> 00:17:45,800
Speaker 1: they fared much better than we did here and much

323
00:17:45,840 --> 00:17:48,960
Speaker 1: better than most places around the world. Today. It has

324
00:17:49,000 --> 00:17:52,760
Speaker 1: been erratic, it's been lockdowns, it's been closures. But here's

325
00:17:52,760 --> 00:17:56,720
Speaker 1: what's Here's what's amazing. The resiliency of the Chinese people.

326
00:17:57,400 --> 00:18:01,399
Speaker 1: Our team over there is unlike anything I've witness. It

327
00:18:01,480 --> 00:18:03,199
Speaker 1: is one of the toughest places to do business in

328
00:18:03,240 --> 00:18:06,680
Speaker 1: the world. But our brand seems to be really resoning

329
00:18:06,680 --> 00:18:09,000
Speaker 1: with people over there right now, and I see it

330
00:18:09,040 --> 00:18:10,439
Speaker 1: as one of the biggest areas of growth. We have

331
00:18:10,480 --> 00:18:14,920
Speaker 1: a shape chair. Restaurants haven't been resonating with Wall Street recently.

332
00:18:15,200 --> 00:18:18,359
Speaker 1: The sector has underperformed the SMP five for much of

333
00:18:18,400 --> 00:18:22,840
Speaker 1: twenty two, but the industry is historically resilient. Restaurants are

334
00:18:22,920 --> 00:18:27,160
Speaker 1: undervalued right now. As a person who has been following

335
00:18:27,240 --> 00:18:31,560
Speaker 1: restaurants since I had hair, I think restaurants are probably

336
00:18:32,240 --> 00:18:37,439
Speaker 1: the most flexible and most creative of businesses that we have.

337
00:18:37,800 --> 00:18:40,479
Speaker 1: The routine and the social engagement happens at restaurants and

338
00:18:40,520 --> 00:18:43,000
Speaker 1: that's not changing. Just because we may or may not

339
00:18:43,080 --> 00:18:45,520
Speaker 1: go into the recession, it just isn't going to change,

340
00:18:45,560 --> 00:18:48,800
Speaker 1: and so the restaurant stocks will rebound. This industry is

341
00:18:48,840 --> 00:18:52,439
Speaker 1: the third largest employer, you know, all the population of

342
00:18:52,480 --> 00:18:55,719
Speaker 1: workers in this country. This is like the fabric of

343
00:18:56,720 --> 00:19:01,320
Speaker 1: the economy and the economy will rebound and restaurant stocks

344
00:19:01,320 --> 00:19:03,840
Speaker 1: will go up. If you want to trade in and

345
00:19:03,840 --> 00:19:06,880
Speaker 1: out of shake Shack, you know you you just may

346
00:19:06,920 --> 00:19:08,560
Speaker 1: not be the time for you. If you are a

347
00:19:08,600 --> 00:19:11,800
Speaker 1: believer in the brand of shake Shack for the long term,

348
00:19:11,920 --> 00:19:14,560
Speaker 1: like we are and have been, We're going to create

349
00:19:14,560 --> 00:19:17,320
Speaker 1: tremendous value for our shareholders over time. We've done that.

350
00:19:17,560 --> 00:19:20,399
Speaker 1: Shareholders should measure us on are we building things for

351
00:19:20,440 --> 00:19:23,159
Speaker 1: the long term? And from me here for the long term,

352
00:19:23,280 --> 00:19:26,000
Speaker 1: my senses, shake Shacks will be good bet. One of

353
00:19:26,040 --> 00:19:28,960
Speaker 1: shake Shack's long term assets is a bright new CFO,

354
00:19:29,320 --> 00:19:32,399
Speaker 1: Katie Fogerty, now has a year of experience under her belt.

355
00:19:32,600 --> 00:19:35,199
Speaker 1: I wanted to know what she sees when she looks ahead.

356
00:19:35,560 --> 00:19:38,600
Speaker 1: What's the opportunity for shake Shack in the next ten

357
00:19:38,720 --> 00:19:41,440
Speaker 1: years that excites you the most? I have to say

358
00:19:41,520 --> 00:19:45,240
Speaker 1: it is in watching our people grow and develop. Um

359
00:19:45,280 --> 00:19:48,480
Speaker 1: I see a very strong growth roadmap here for the

360
00:19:48,480 --> 00:19:51,919
Speaker 1: company in terms of units and and sales potential. But

361
00:19:52,000 --> 00:19:53,600
Speaker 1: what that really means at the end of the day

362
00:19:53,840 --> 00:19:57,240
Speaker 1: is that our hourly team members are able to grow

363
00:19:57,359 --> 00:19:59,560
Speaker 1: a career with us in a way that it's unique

364
00:19:59,560 --> 00:20:02,080
Speaker 1: to shake Chack and cannot be found at many other

365
00:20:02,160 --> 00:20:04,879
Speaker 1: restaurant brands. We have a number of people who started

366
00:20:04,920 --> 00:20:07,280
Speaker 1: off as hourly team members and are now making six

367
00:20:07,320 --> 00:20:10,679
Speaker 1: figures and have equity because they've grown up through this

368
00:20:10,920 --> 00:20:13,760
Speaker 1: the system and they're paying it forward by training other

369
00:20:13,840 --> 00:20:16,680
Speaker 1: people to allow them to have such a great career

370
00:20:16,680 --> 00:20:19,040
Speaker 1: path as well. What's the challenge over the next ten

371
00:20:19,119 --> 00:20:21,680
Speaker 1: years that keeps you up at night? It also goes

372
00:20:21,720 --> 00:20:24,680
Speaker 1: with people. UM. It has been a very challenging staffing

373
00:20:24,800 --> 00:20:28,000
Speaker 1: environment for the restaurant industry as a whole. UM. It's

374
00:20:28,040 --> 00:20:30,239
Speaker 1: been well telegraphed that you know, some people have just

375
00:20:30,359 --> 00:20:33,760
Speaker 1: left the industry altogether. UM. And so you know, we

376
00:20:33,840 --> 00:20:36,320
Speaker 1: know when we have high turnover, we're not operating at

377
00:20:36,359 --> 00:20:38,720
Speaker 1: our best UM. And so I do think that there's

378
00:20:38,720 --> 00:20:42,240
Speaker 1: an amazing opportunity that once kind of the world stabilizes

379
00:20:42,280 --> 00:20:45,720
Speaker 1: and returns you back to normal UM, that we have

380
00:20:45,840 --> 00:20:50,480
Speaker 1: people considering the restaurant industry as more of an exciting

381
00:20:50,520 --> 00:20:54,320
Speaker 1: long term career. In terms of your role as CFO,

382
00:20:54,440 --> 00:20:56,520
Speaker 1: how do you see that or your role with this

383
00:20:56,600 --> 00:20:59,679
Speaker 1: company changing and developing over the next ten years. I

384
00:20:59,720 --> 00:21:02,840
Speaker 1: think that you know, it becomes ever more important to

385
00:21:03,000 --> 00:21:07,639
Speaker 1: have a great grasp on the insights that are driving business,

386
00:21:07,720 --> 00:21:11,800
Speaker 1: on the factors that are driving your business UM, and

387
00:21:12,040 --> 00:21:14,520
Speaker 1: you know that's very important for CFO to do, but

388
00:21:14,600 --> 00:21:17,520
Speaker 1: also to collaborate with other business leaders within the company

389
00:21:18,000 --> 00:21:21,040
Speaker 1: UM to help, you know, kind of cross pollinate strategies.

390
00:21:21,400 --> 00:21:23,320
Speaker 1: You know, whatever I do in a vacuum is not

391
00:21:23,359 --> 00:21:26,000
Speaker 1: going to be nearly as impactful as our entire executive

392
00:21:26,080 --> 00:21:29,439
Speaker 1: leadership team coming together and acting on something. And I

393
00:21:29,480 --> 00:21:32,439
Speaker 1: think that that is ever more apparent sitting on this

394
00:21:32,480 --> 00:21:34,960
Speaker 1: side of the table than it was on the other

395
00:21:35,000 --> 00:21:37,840
Speaker 1: side as a well street analyst. Speaking of that, what

396
00:21:38,080 --> 00:21:40,840
Speaker 1: skill or what area of knowledge do you think has

397
00:21:40,880 --> 00:21:43,480
Speaker 1: helped you the most in your first year of CFO

398
00:21:44,200 --> 00:21:46,960
Speaker 1: m hm. I would say just a lot of grit.

399
00:21:47,320 --> 00:21:50,480
Speaker 1: This has been a very challenging industry for sure. UM.

400
00:21:50,520 --> 00:21:52,199
Speaker 1: I never thought it was going to be easy, and

401
00:21:52,280 --> 00:21:54,919
Speaker 1: it's proved to be quite the learning opportunity coming in

402
00:21:55,000 --> 00:21:58,159
Speaker 1: every day, just excited to learn something new, UM and

403
00:21:58,200 --> 00:22:00,960
Speaker 1: make a difference wherever you can, knowing that I'm sitting

404
00:22:00,960 --> 00:22:04,240
Speaker 1: here with a team of people growing a company that

405
00:22:04,359 --> 00:22:07,240
Speaker 1: will potentially have an impact on a number of people's

406
00:22:07,280 --> 00:22:10,240
Speaker 1: lives going forward. So what advice would you give someone

407
00:22:10,280 --> 00:22:14,080
Speaker 1: else then, who maybe is watching and gets promoted to CFO.

408
00:22:14,160 --> 00:22:16,959
Speaker 1: What advice would you give to a future CFO. What

409
00:22:17,000 --> 00:22:19,560
Speaker 1: advice would I give to a future CFO? UM? I

410
00:22:19,560 --> 00:22:22,280
Speaker 1: guess it would just get into the details, super super

411
00:22:22,320 --> 00:22:25,560
Speaker 1: deep UM and really kind of understand and ask a

412
00:22:25,560 --> 00:22:28,560
Speaker 1: lot of questions. Peel the onion. UM. I think a

413
00:22:28,640 --> 00:22:30,600
Speaker 1: lot of people just don't go deep enough and don't

414
00:22:30,640 --> 00:22:33,000
Speaker 1: ask the questions so that you actually cannot you know,

415
00:22:33,320 --> 00:22:35,239
Speaker 1: if you if you're not versed on what's going on,

416
00:22:35,359 --> 00:22:38,800
Speaker 1: you can't find root cause and you can't dry change UM.

417
00:22:38,880 --> 00:22:41,760
Speaker 1: So you know, I would say, get into the details,

418
00:22:41,800 --> 00:22:45,960
Speaker 1: have an open mind. It's an incredibly fun job for sure,

419
00:22:46,600 --> 00:22:49,280
Speaker 1: working with people who are coming you know, everybody's aligned

420
00:22:49,359 --> 00:22:51,880
Speaker 1: here to drive the future of shake Shack, but everybody

421
00:22:51,880 --> 00:22:54,400
Speaker 1: comes at it from a different angle. So it's very

422
00:22:54,440 --> 00:22:57,400
Speaker 1: exciting to work with an amazing team of people. I'm

423
00:22:57,440 --> 00:23:02,080
Speaker 1: Matt Miller, this is Bloomberg stopt