Shake Shack Opened a Record 21 Stores in 3 Months — Here’s Their One Strict Rule for Growth That’s Paying Off
CEO Rob Lynch says new Shacks aren’t cannibalizing each other, and Wall Street likes what it’s hearing.
If a Shake Shack opens in your neighborhood, don’t expect another one nearby. Unlike some brands that flood the zone with locations (we’re talking to you, Starbucks), the burger chain doesn’t build a new store within 10 miles of an existing one, at least outside Manhattan, according to CEO Rob Lynch.
That doesn’t mean Shake Shack is growing. It opened a record 21 Shacks last quarter and 54 so far this year, with as many as 65 expected by year’s end. Lynch believes the U.S. has room for at least 1,500, Restaurant Business reports.
The biggest risk of opening stores this fast is cannibalization, where a new location steals sales from an existing one. That’s what the 10-mile rule is designed to prevent. Lynch says the only overlap comes from delivery, since a typical delivery radius is about 7 miles.
So far, the 10-mile strategy seems to be working. Same-store sales rose 2.5% in the third quarter, the fifth straight quarter of growth, even though new shacks open with lower sales than the chain’s $4 million average. Revenue climbed 15.2% to $423.3 million, and the stock jumped nearly 9% on Monday.