COMPANY PROFILE -Shake Shack Inc.
Business Sector :Fast Casual Restaurant Chain
Operating Geography :United States, North America, Global
About Shake Shack Inc. :
Shake Shack is a New York City-based American fast-casual restaurant brand. In 2001, it began as a hot dog vendor in Madison Square Park, and its popularity expanded rapidly. It expanded its menu from New York-style hotdogs to hamburgers, hotdogs, fries, and its trademark milkshakes when it moved to a stand within the park in 2004. The shakes at Shake Shack have been rated "among the best in the industry." Chicken burgers, fries, hot dogs, frozen custards, beer, and wine are also offered. The beverage selection in each new site is tailored to the unique flavors of the place in which it operates. The ShackBurger is the company’s most well-known product. It comes in single or double servings and includes a beef patty, American cheese, lettuce, tomato, and Shack Condiment, a proprietary sauce. Over 298 Shacks are operated by the Company, with over 175 being domestic Company-owned Shacks. It has a workforce of around 11,000 employees as of 2023.
Shake Shack's Unique Selling Point or USP is that it has grown into a worldwide recognized brand with a high level of customer awareness compared to its existing footprint. The mission statement of Shake Shack reads, “Stand for Something Good”. In fact, at Shake Shack, we think this statement is so important that we print it on every Shack employee's shirt. Our mission statement allows us to check ourselves in everything we do and in every decision we make.
Shake Shack Inc. Revenue :
US$900 million - FY ended December 28th, 2022
US$730 million - FY ended December 28th, 2021
Competitive Analysis of Shake Shack Inc.
The SWOT analysis for Shake Shack Inc. is presented below in a matrix followed by a detailed analysis
Strengths | Weaknesses |
1. Digital strategy which helps in achieving economies of scale
2. Well-positioned brand identity and brand awareness among consumers
3. Unique value proposition resulting in high consumer satisfaction | 1. Seasonal nature of business affecting quarter-to-quarter sales
2. Consumer dissatisfaction in terms of value for money
|
Opportunities | Threats |
1. High growth for company-owned businesses in the domestic market
2. Growth opportunity for licensed businesses in international markets
3. Takeaways in the form of drive-throughs becoming popular among consumers
4. Implementation of digital kiosks enhancing guest experience
5. The company refreshes its menu with limited-time offers (LTOs) to keep customers engaged and attract new ones
| 1. Limited suppliers and distributors increase the risk of supply shortage
2. High risk of reputation damage in case of food safety issues |
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Detailed SWOT Analysis of Shake Shack Inc.
Strength
This section is available only in the 'Complete Report' on purchase.
Weakness
This section is available only in the 'Complete Report' on purchase.
Opportunity
This section is available only in the 'Complete Report' on purchase.
Threat
1. Limited suppliers and distributors increasing risk of supply shortage: Shake Shack's procurement portfolio is poorly diversified for most of its raw materials. During FY20 the company purchased more than 40% of raw material from just 5 suppliers. In addition, the biggest supplier of the company’s “ShackSauce” accounted for more than 75% of purchases of the sauce. Similarly, on the distribution front, the company has a single "broadline" distributor in the US providing all distribution services. In FY20, this distributor alone was responsible for processing 84% of raw materials which make up 45% of the total purchases for the company. As the suppliers and distributors of the company are so concentrated, the company faces heavy risks in case of even a single supplier canceling orders. The limited number of suppliers and reliance on a single national distribution company expose Shake Shack to significant risks of supply shortages and increased costs. In fiscal 2022, the concentration of suppliers for major ingredients, including beef patties, chicken, potato buns, custard, mushrooms, cheese sauce, and others, creates vulnerability. Approximately 42% of ground beef patties come from one supplier, and the cancellation or disruption of supply arrangements with any key supplier could adversely impact operations. Additionally, reliance on a single "broadline" distributor for 95% of food and beverage ingredients in the US, with 20 affiliated distribution centers, introduces risks. Catastrophic events like a fire at a distribution center could lead to immediate product shortages, especially in critical regions like New York and northern New Jersey, significantly affecting sales. The limited availability of alternative supply and distribution sources further heightens the risk of encountering shortages and incurring higher costs, posing potential material adverse effects on Shake Shack's results of operations.
The remaining section under "Threat" is available only in the 'Complete Report' on purchase.
The PESTLE analysis for Shake Shack Inc. is presented below in a matrix followed by a detailed analysis
Political | Economical |
1. Governments aided businesses in the pandemic, scrutinized funds distribution | 1. Inflation affects the economy, especially food and restaurants
2. Despite uncertainties, industries strategically expand operations
|
Social | Technological |
1. Workplace inclusivity trend combats discrimination, fosters societal change
2. Millennials impact consumer trends in the 18-34 age group
| 1. Chatbots turning out to be an effective tool for customers
2. KDS technology contributes to maintaining consistency and efficiency
3. Advancements in technology impact various aspects of the restaurant industry
|
Legal | Environmental |
1. Tip pooling rule in US affects net profits for restaurants
| 1. Sustainably sourced raw materials ensure quality across the supply chain
2. Need for adoption of smart food management strategies |
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Detailed Pestle Analysis of Shake Shack Inc.
Political
This section is available only in the 'Complete Report' on purchase.
Economic
This section is available only in the 'Complete Report' on purchase.
Social
This section is available only in the 'Complete Report' on purchase.
Technological
This section is available only in the 'Complete Report' on purchase.
Legal
1. Tip pooling rule in the US affects net profits for restaurants: Restaurants across the US are bound by the Labor's tip-pooling rule, which states that waitstaff is not required to share the tips received from customers with employees in the backstaff. This rule directly affects the net profits earned by restaurants, because they cannot show this money on their books. In addition, the backstaff has no incentive to put extra effort into their work. Therefore, restaurants have tried to offset this inequality by adding a fixed percentage "service charge" in the bills, as a mandatory fee to be paid by customers which would get translated into the backstaff's salary and employee benefits.
Environmental
This section is available only in the 'Complete Report' on purchase.
Major Competitors :
- Subway
- Smashburger
- Jack in the Box
- Burger King
Major Brands :
- ShackBurger
- SmokeShack
- Shroom Burger
On purchase the Shake Shack Inc. SWOT and PESTLE Analysis PDF report will reach you within minutes. At rare times, a slight delay not exceeding 1 hour might be caused.
TABLE OF CONTENTS
DELIVERY AND FORMAT
WHY CHOOSE US?
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Check Out Analysis of Other Relevant Companies
References used in Shake Shack Inc. SWOT & PESTLE Analysis Report
1. Shake Shack Annual Report 2022 - https://s27.q4cdn.com/357966323/files/doc_financials/2022/ar/Annual-Report-to-Stockholders.pdf
2. Restaurant Furniture - https://www.restaurant-furniture.com/resources/articles/seasonal-factors-affecting-restaurant-industry
3. Barrons - https://www.barrons.com/articles/shake-shack-menu-stock-shak-news-de05a1
4. NY Times - https://www.nytimes.com/2023/11/07/dining/drive-through.html
5. CNBC - https://www.cnbc.com/2021/03/12/drive-thru-ordering-surged-during-the-pandemic-heres-what-comes-next.html
The detailed complete set of references are available on request in the 'Complete report' on purchase.
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Shake Shack Inc. SWOT and PESTLE analysis has been conducted by Divyansh Kharadkar and reviewed by senior analysts from Barakaat Consulting.
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