Shake Shack 2015 Annual Report Download - page 6

Table of Contents
Our vision is to Stand For Something Good
®
in all aspects of our business, including the exceptional team we hire and train, the premium ingredients making up our menu, our
community engagement and the design of our Shacks. Stand For Something Good is a call to action for all of our stakeholders—
our team, guests, communities, suppliers and
investors—
and we actively invite them all to share in this philosophy with us. This commitment drives our integration into the local communities in which we operate and fosters a
lasting connection with our guests. We continually invest in our "Shack Team," as we believe that team members who are treated and trained well will deliver Enlightened Hospitality
and a superior guest experience. Through our leadership development program, The Shacksperience™
, we teach our team members the principles of Enlightened Hospitality and how
to live and breathe our Shack Pact™
, the agreement that encompasses our value system and brand ethos. Our people make all the difference, as they embody the sense of community
necessary to create the complete Shake Shack experience. This vision reflects our goal to be the best burger company in the world, for the world and for our team.
We believe Shake Shack has become a compelling lifestyle brand and has helped to pioneer the creation of a new fine casual category in restaurants. Fine casual
couples the ease,
value and convenience of fast casual concepts with the high standards of excellence in thoughtful ingredient sourcing, preparation, hospitality and quality grounded in fine dining. As a
pioneer in this new category, we strive to maintain the culinary traditions of the classic American burger stand, while providing our guests a menu of chef-
inspired food and drinks. Our
signature items are our all-natural, hormone and antibiotic-free burgers, hot dogs, crinkle-
cut fries, shakes and frozen custard. We cook our burgers and spin our shakes to order and
strive to use the freshest premium ingredients available. This core menu is supplemented with seasonal and innovative culinary offerings such as those featured during our annual
Shacktoberfest event.
MARKETS AND COMPETITION
Shake Shack is part of the burger market of the restaurant industry, which is the largest dine-
out segment in the United States with more than $72 billion in 2013 sales, according to
Technomic Inc. The burger industry is estimated to be twice the size of the pizza market, which is the next largest category. Given its role as the quintessential American meal, burgers
have also proven to be the most portable concept internationally.
The restaurant industry is highly competitive and fragmented. We compete primarily with "better burger" restaurants and, to a lesser extent, fast casual restaurants, quick service
restaurants and casual dining restaurants. Our competition in the broadest perspective includes fast casual and fine dining restaurants, convenience food stores, delicatessens,
supermarkets and club stores. The number, size and strength of our competitors vary by region. Our competition includes a wide variety of locally owned restaurants and national and
regional chains. Some of our competitors, including some of our "better burger" competitors, have greater financial, marketing, personnel and other resources than we do, and many of
our competitors are well-
established in markets in which we have existing Shacks or intend to locate new Shacks. In addition, many of our competitors have greater name recognition
nationally or in some of the local markets in which we have or plan to have Shacks. However, we specifically target guests that appreciate our engaging and differentiated guest
experience that includes great food, unique and thoughtful integration with local communities and high standards of excellence and hospitality. We believe that we compete primarily
based on experience, product quality, restaurant concept, service, location and value perception. Our competition continues to intensify as competitors enter the burger segment and
open new restaurants. Additionally, we compete with local and national restaurant concepts and other retail concepts for prime restaurant locations.
With the majority of the burger restaurant segment comprised of quick service restaurant competitors, we believe that Shake Shack is well positioned to take market share, as we
believe consumers will continue to trade up to higher quality offerings given an increasing consumer focus on responsible sourcing, ingredients and preparation. Additionally, we
believe that consumers will continue to move away from the added time commitment and cost of traditional casual dining. We believe that many consumers want to associate with
brands whose ethos matches that of their own, and that Shake Shack's fine casual position, born and raised in Manhattan, creates a distinctly differentiated global lifestyle brand
opportunity.
OUR COMPETITIVE STRENGTHS
Our Culture of Enlightened Hospitality: Taking Care of Each Other
We believe that the culture of our team is the single most important factor in our success. We aim to recruit people who are warm, friendly, motivated, caring, self-
aware and
intellectually curious—
what we call "51%'ers." We use the term "51%" to describe the emotional skills needed to thrive at the job and "49%" to describe the technical skills needed for
the job. Our 51%'ers are excited and committed to championship performance, remarkable and enriching hospitality, embodying our culture and actively growing themselves and the
brand. Our team is trained to understand and practice the values of Enlightened Hospitality: caring for each other, caring for our guests, caring for our community, caring for our
suppliers and caring for our investors. These principles have been championed by Danny Meyer throughout his career and are detailed in his New York Times best-
selling book
Setting the Table : The Transforming Power of Hospitality in Business ; they are fundamental to the way Shake Shack operates its business.
Culture
Our culture is rooted in the nearly 30-year history of USHG. Our commitment to Stand For Something Good
permeates throughout every Shack and every team member we hire.
Expounding on the principles of USHG's Enlightened Hospitality and Stand For Something Good is our Shack Pact
, which is prominently displayed in the team member areas of
every Shack, on the inside cover of the Shackademics™ book (our training manual) and on the
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