Shake Shack 2015 Annual Report Download - page 11

Table of Contents
The goal of our training programs is to develop leaders and to cross-utilize team members throughout our operations. We call our team member life cycle, The Shacksperience
. This
model clarifies and outlines growth opportunities at all levels of the organization and furthers our philosophy of hiring and developing 51%'ers, growing from within and "leaders
training future leaders." We train our culture and guiding principles first, and then move to menu knowledge, followed by a focus on station training. We believe that everyone learns
differently and our training uses various formats: online interactive, video, hands-on and paper-based. Every team member has access to ShackSource
, our proprietary online training
portal, which is used not only as a learning platform, but also as a communication tool for our team. As an example, ShackSource
is a way for team members to send recognition
messages, comments, praise and thanks to their fellow team members across the Company.
GROWTH STRATEGIES
We believe that we are well-
positioned to achieve significant, sustainable financial growth. We plan to continue to expand our business, drive Shack sales and enhance our competitive
positioning by executing on the following strategies:
Opening New Domestic Company-Operated Shacks
This is where our greatest immediate opportunity for growth lies. We waited nearly five years to open our second Shack, and we are still in the very nascent stage of our story, with
only 31 domestic company-
operated and five domestic licensed Shacks in 10 states and Washington, D.C. as of December 31, 2014. We believe there is tremendous whitespace
opportunity to expand in both existing and new U.S. markets, and we have invested in the infrastructure that will enable us to continue to grow rapidly and with discipline. In fiscal
2014, we significantly expanded our domestic company-operated footprint by opening 10 new Shacks representing a 47.6% increase in our domestic company-
operated Shack count.
We plan to open at least 10 new domestic company-
operated Shacks each year for the foreseeable future. Based on our experience, and analysis and research conducted for us by eSite,
we believe that over the long-term we have the potential to grow our current domestic company-operated Shack footprint to at least 450 Shacks by opening domestic company-
operated
Shacks in new and existing markets. The rate of future Shack growth in any particular period is inherently uncertain and is subject to numerous factors that are outside of our control.
As a result, we do not currently have an anticipated timeframe for such expansion. We believe we have a versatile real estate model built for growth. We have adopted a disciplined
expansion strategy designed to leverage the strength of our business model and our significant brand awareness to successfully develop new Shacks in an array of markets that are
primed for growth, including new and existing, as well as small and large markets. As we grow, we will continue to live by one principle to ensure the success of both our new and
existing restaurants: "The Bigger We Get, The Smaller We Need To Act." This mantra is central to our Stand For Something Good vision and encompasses our commitment to
continue to make decisions that focus on the core of who we are, staying true to the principles of Enlightened Hospitality.
Capitalizing on Our Outsized Brand Awareness
The Shake Shack experience has cultivated significant brand awareness relative to the small number of Shacks we operate. We have worked tirelessly to establish a genuine connection
with our guests and integrate into their communities through investment in innovative marketing and programming. We utilize various social media outlets to actively engage with our
growing online following. In June 2014, we ranked #10 on Restaurant Social Media Index's
top 250 restaurant brands, which is measured on influence, sentiment and engagement.
Furthermore, we believe that our press and media impressions and industry recognition are a testament to the strength of our brand. We were named one of "The 25 Most Innovative
Consumer and Retail Brands" in 2014 by Entrepreneur.com , ranked #11 in The Daily Meal's
"101 Best Restaurants in America" for 2013, and were the winner of the 2013 "Most
Loved Brand of the Year" from the RIZMY Awards, "Best Burger" at the 2014 South Beach Wine and Food Festival's Burger Bash and more. Additionally, we give back to the
communities in which we operate, and strengthen awareness for philanthropic causes such as Share Our Strength's No Kid Hungry
campaign. Our marketing efforts focus on
interacting with our guests in an authentic, innovative manner which creates memorable, meaningful experiences. The experience that we provide for our guests and local communities
has generated a growing loyal following who promote our brand through word-of-
mouth. We believe that this outsized brand awareness will continue to fuel our growth in existing and
new markets.
Growing Same-Shack Sales
Given the significant awareness of our brand and the excitement we have been able to generate for our market launches, our Shacks have generally opened with higher volumes and
operating profits relative to their second year, which have often shown a decline in sales and operating profit. In year three, our Shacks generally mature and continue to grow from the
second year base and then retain these higher volumes over time. It is important to note that, while our goal is to grow same-
Shack sales over time, this is not our greatest growth
opportunity. We expect our Shacks to deliver low same-
Shack sales growth for the foreseeable future as the number of new Shack openings relative to our comparable Shack base
remains our primary driver of growth. We do, however, continually focus on improving our same-
Shack sales performance by providing an engaging and differentiated guest
experience that includes new seasonal and Shack-
specific offerings, unique and thoughtful integration with local communities and high standards of excellence and hospitality. We will
continue to innovate around our core menu to keep our offerings fresh, while remaining focused on our signature items.
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