Everyday Ear Training - Day 7: Why Shake Shack Is Borrowing Ideas from Fast Food Restaurants?

[Music] Shak Shack has always made it clear it isn't fast food everything is made to order and that customization means customers have to wait but as Shake Shack expands it seems to be taking a lot of ideas from fast food it's building drive-throughs adding rest off locations and installing ordering kiosks a Shake Shack tries to compete in spaces traditionally dominated by fast food it's got to speed up operations because many customers expect to get their food quickly but this is a major challenge for a company built on a guarantee of fresh cooked meals every time this is the economics of Shak Shack long lines have been part of Shake Shack's DNA from the beginning when they first started this popup roadside hot dog and restaurant stand in Madison Square Park there was lines so it really had this kind of cult Vibe around it in New York but as Shake Shack continues to EXP band it has to speed up we want it to be a little more convenient we want to be a little more consistent uh on our speed and our execution a big part of this initiative is drive-thru that's been a major priority for Shake Shack since the pandemic dampened walk-in business in some of its main markets Shake Shack has opened more than 30 drive-through locations in the past few years and it's planning to build about a dozen more this year how we do all right take care drive-throughs can be significantly more profitable than DIN and service because customers cycle through the restaurant faster and they do big business McDonald's for instance does about 70% of its multi-billion dollar US business from drive-thru they can be very efficient you can do a lot of sales quickly there's not the expense of maintaining a dining room in the same way so you really save in certain ways particularly if you can get the volumes of people who are able to go through your drive-thru at Peak this has led lots of companies to get into the drive-through business and they compete fiercely over weight times Taco Bell for instance has a four-lane dri drive through outside Minneapolis with dedicated pickup points for mobile orders and delivery drivers Chick-fil-A has used so-called Upstream ordering for years where staff come out with tablets and take orders in person that avoids a bottleneck of customers waiting to reach the menu board all to save precious seconds according to mystery shopper data Taco Bell and McDonald's drive-throughs had total wait times of about 4 to 7 minutes which includes the time you're waiting to order ordering paying and then receiving the food Shake Shack doesn't disclose weit times for its drive-throughs but it's set on past earning calls that just filling orders typically takes it around 6 to 8 minutes decreasing weight time has been a major Initiative for the company we do a couple of things a little bit differently in our drive-throughs than we do in our restaurants it's not compromising the cook fresh but it is really on the technology side they start cooking orders as soon as customers place them rather than waiting until they pay hello how we doing today similar to Chick-fil-A they sometimes send staff to bus orders maintaining a premium feel is important to justifying its prices Shake Shack is middle of the road for a fast casual restaurant but much more expensive than fast food it is a tension that we battle every day between speed and cook to order food we can't compete on speed because we want to cook our food in a certain way but we can certainly emphasize our hospitality and certainly delivering on the high quality of the product they've also done time motion studies to maximize efficiency in their kitchens we've been working on a bunch of different ways of how we're flowing food throughout the kitchen to really optimize and reduce the number of steps that our team members have to take for example we used to wash and cut all of our lettuce in house we've then transitioned to pre-cut lettuce so now our team members focus on you know making sandwiches and not having to sit there in the back of the house and and cutting up and washing lettuce um all day long Shake Shack operates most of its own restaurants but it's increasingly relying on licensed locations as it expands internationally and to rest stops stadiums and airports that means it selects outside companies to partner with and those companies pay fees to Shake Shack that's been a major driver in Shake Shack's rapid expansion Shak Shack opened its first permanent location in 2004 it sales pitched to customers emphasized fresh ground antibiotic free beef and it was founded by fine dining leader Danny Meyer known for his restaurants like 11 Madison Park which gave it cach it's now a $4 billion doll company with over 500 locations around the world the company says its International locations have also helped it develop new products particularly limited time offerings we learn a lot from our license locations even our Chicken Shack sandwich was actually born out of the international license business for Shacks that did not um serve beef we also had locations that had kind of more of a regional uh flavor profile like the Korean fried chicken sandwich that we brought over here but operating at this scale with fresh ingredients and a premium experience has challenges it's important for them still to be premium and have that Vibe I mean people are paying more for Shake Shack than they would at Burger King um and so you have to believe that the food's better and the brands better Shake Shacks had to invest significantly in data operations so it doesn't order too much or too little food the ability to get a sales forecast very very tight really sets the tone for how the profitability can be at that location and across your entire fleet means that your waste is within control and that you're not selling out of items and you're able to meet Gest demand we're not having to make decisions on a particular menu item which might have a negative impact we're we're literally just getting smarter at our operations Shake Shack has ambitious expansion plans led by its new CEO who brings experience growing major chains in the quick service restaurant industry over Rob Lynch's time at Arby's first as CMO and then as president sales grew over 20% at Papa John's he helped the company recover from a significant slump and opened hundreds of new restaurants though the chain has been lagging recently L it's challenging to take a Homespun New York City brand or any brand that's you know grew up in a certain geography and push it out nationally I mean the company is really working now to try to be more efficient to try to make restaurant run better and they are having some success but I think the real focus on Shake Shack now is can they keep running these restaurants profitably and to continue to grow