Shake Shack Eyes 70 More Locations

The QSR is focused on its drive-thru format, which attracts new customers previously out of reach.

January 16, 2023

ALEXANDRIA, Va.—Shake Shack is planning to open another 65-70 locations this year, reports Restaurant Dive. Forty of the restaurants will be domestic locations, and the remaining 25-30 will be licensed.

Last year, the quick-serve restaurant opened 69 stores, which were a blend of store formats, including drive-thrus and nontraditional locations in food courts, airports and travel centers. Currently, Shake Shack has four locations in roadside travel center locations and plans to open three to five more this year.

According to Shake Shack CEO Randy Garutti, the company is focused on the drive-thru format. The first drive-thru location opened in 2021, and there are currently 11 drive-thrus in the company’s portfolio. Shake Shack plans to open 10-15 more of these formats this year

“There are many of the drive-thrus that are run-rating higher than that and some that are below,” Garutti said during the ICR Conference. “We’re learning what is it about that site, about the layout, about that type of drive-thru that’s going to drive that [AUV].”

Drive-thru units are more expensive to build, costing the company $2.4 to $3 million, he said. Shake Shack wants average unit volumes (AUV) to be $4 millionwhich averaged about $3.8 million in 2022.

“There will also be some built-to-suit opportunities where we can spend less than this and trade a bit of a higher occupancy for lower build-out costs to overall balance our CapEx,” he said.

Shake Shack is experimenting with opening drive-thru locations close to smaller format units to capture different customer demographics. One drive-thru location in Orlando is averaging about $4.5-$5 million AUVs, and  a smaller location less than a mile away is posting $4 million in AUVs.

“We’re getting $8 million in Shack-level sales in less than one mile,” Garutti said. “We think there’s a lot of places around this country and this world that we can do this. This is why you’re going to see different formats coming out of Shake Shack.”

The company is also experimenting with airport locations, which are a good testing ground for the chain, according to Garutti. Shake Shack opened its first location with a bar at Denver International Airport. The success of that location has encouraged management to consider bringing alcohol to more company-owned and licensed stores, Garutti said.

Other restaurants and QSRs are rethinking their drive-thru strategies. McDonald’s is testing a new drive-thru innovation at a test restaurant in Fort Worth, Texas, where customers who order ahead through the QSR’s app can use a designated lane and receive their food and drinks via a conveyor, and team members can start preparing orders once customers are near the restaurant.

Chick-fil-A has been testing dedicated drive-thru express lanes at about 60 U.S. locations for mobile-order customers who use the QSR’s app to help limit wait times by allowing them to bypass the regular drive-thru line to pick up their meal.

Late last year, Sweetgreen opened its first advanced order vehicle pickup window called “sweetlane,” which allows customers to pick up online orders through a drive-up window.

Read how convenience retailers like Jiffy Trip and EG Group are managing the drive-thru experience in “Drive-Thru Advantage” in the September 2022 issue of NACS Magazine.