While Shake Shack is unavailable for franchising as of 2023, the company offers licensing and real estate deals to grow its footprint. This local favorite, once centered exclusively in Madison Square Park in New York, now has locations internationally and across several states with more than 400 total units at the time of writing.
Although franchising this restaurant is off the table, Shake Shack offers to license and supply chain deals to qualified investors and is also a publicly traded company. Here, I discuss Shake Shack’s history, the source of the company’s success, and what to expect when partnering with this fast-casual dining franchise. If you want to open business that does franchise, take our 8-minute quiz here.
- What makes Shake Shack so successful?
- Is Shake Shack losing money?
- Are there any alternatives to Shake Shack?
- How Much Will It Cost to License a Shake Shack?
- How Much Profit Do Shake Shack Licencees Make Per Year?
Learn About Shake Shack
Shake Shack Facts
|Total Units:||Over 400|
|Industry:||Food and Beverage|
Shake Shack started as a hot dog cart in Madison Square Park, New York, in 2001, intending to fund a local art project. The cart’s popularity grew, as did the company. So in 2004, Shake Shack got a permanent location in the same park where it began. The company has grown to over 400 locations as of 2023 with 262 restaurants in the United States and 140 international locations.
While Shake Shack started as a hotdog cart, its menu has grown to include shakes, burgers, and more. Their food is standard fast food fare, including chicken nuggets and crinkle-cut fries. Its custom shakes set its menu apart from chains like McDonald’s and Burger King, and its soda floats are unique compared to other similar shake chains.
By promoting high-quality ingredients without additives, its small menu continues to attract big customers. While its menu is standard for the industry, its atmosphere leans toward artistic and clean, focusing on sustainable practices and supply chain transparency as part of its brand identity.
In 2022, Shake Shack planned to add drive-thru options to 25% of its restaurants and open several new locations. While these plans were somewhat complicated by supply issues and labor shortages, the company continues to update and expand its existing sites to serve its customers better and plans to open another 40 restaurants in 2023.
While most of Shake Shack’s US locations are corporate-owned and run, it offers exclusive licensing agreements in the following countries:
- Kingdom of Saudi Arabia
- South Korea
- United Arab Emirates
- United Kingdom
What Makes Shake Shack Successful?
Shake Shack uses a unique strategy for planning future business locations. By targeting critical real estate locations and working with local architecture styles, this brand comes out the gate looking like it belongs wherever it starts a location. In addition, unlike other companies that offer franchise opportunities, Shake Shack directly calls for real estate investors on its website.
By melding in with the surrounding area, these burger joints avoid the flashy appearance of some other fast food chains. Its real estate must-haves include corner lots or access to significant thruways and outdoor seating to elevate their dining experience. In addition, the company recently emphasized parking spaces to allow for digital order pickups, a popular aspect of many modern fast-casual dining restaurants.
Another aspect of this company’s success is its simple menu emphasizing healthy, ethically sourced ingredients. While no one claims that burgers, shakes, and fries are a healthy meal choice, by putting care into their ingredient list and putting forward the image of a cleaner dining experience, Shake Shack set its menu apart from the rest of the well-known burger joints, earning it a dedicated following.
Notably, due to this company’s small beginnings, it has garnered something of a loyal fanbase. Though the international nature of this restaurant chain has well surpassed its local beginnings, the restaurant still works off of this loyalty. While its locations far outstrip its first hot dog cart by building its restaurants to fit the area around them and prioritizing high-quality ingredients, Shake Shack has extended that small-restaurant loyalty to its corporate form, leading to significant success.
Is Shake Shack Losing Money?
In a study of Shake Shack’s 2022 profits, while the company ran into labor issues in 2022, the overall profit margin for the company was 17%. In addition, unit sales were up 7.8% from the previous year across the board, indicating a net-positive trend across its locations. Overall, the company estimated positive growth across all its locations in 2023, looking forward to expanding its locations locally and internationally.
Shake Shack is still gaining money as of 2023. While the company did run into financial challenges during the COVID-19 pandemic and the resulting shutdown and labor crisis that followed, steady growth margins indicate that the company is, at the very least, financially stable at this time. Moreover, with development plans including adding drive-thru locations and expanding to foodcourts and urban areas, Shake Shack is far from going under.
It is worth noting that the company did see slight financial problems in the years following the pandemic and that profit margins are slightly lower than expected for a company this size. However, 2022 margins are the highest since before the pandemic, indicating steady growth. While it’s always best to talk with a financial advisor before investing in a company, Shake Shack is far from losing money and appears to be a stable fast-casual dining company at the time of writing this article.
Are There Alternatives to Shake Shack?
In short, any successful fast-casual burger joint is a viable alternative to Shake Shack. In addition, most fast-casual restaurants that offer direct franchising alternatives are worth looking into if you’re interested in investing in a burger restaurant. Comparable restaurants to Shake Shack include Whataburger and Smashburger, as well as chain-cornerstone restaurants like McDonald’s. These three alternatives offer franchising opportunities and are a direct way to join the fast-casual dining industry.
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While these restaurants are somewhat comparable to Shake Shack, they have different business models and branding. For example, suppose you’re looking for the ethically sourced ingredients and landscape-conscious company identity innate to Shake Shack. You may be better looking outside the fast-casual burger chain genre of restaurants and, instead, check out smaller-scale restaurants. Similarly, if you’re looking for businesses with licensing agreements instead of full franchise deals, check out MrBeast Burger.
How Much Does It Cost to License a Shake Shack?
Since Shake Shack does not offer licensing opportunities in the United States, finding out the exact cost of licensing this fast-casual dining restaurant is difficult. However, by comparing Shake Shack to similar dining experiences, we can come to a general estimate of how much it costs to license these locations. Remember that these are estimates and that you should review official licensing documents before making any financial decisions.
Some franchise experts compare Shake Shack to other burger restaurants, including Whalburger and Whataburger. While these comparisons have downsides, the average cost of starting a fast-casual dining experience is similar across the board. Here, we compare the theoretical industry averages for starting a fast-casual burger restaurant and how they may relate to starting a Shake Shack location.
Once again, Shake Shack has yet to offer franchi