Shaking up Wall Street
January 30, 2015
The hamburger chain that prides itself on fresh ingredients and good service raised $105 million (93 million euros) selling 5 million shares at $21 per share.
That was a huge hike on its initial forecast, which said its shares would fetch $14 to $16 per share from investors, and raised that forecast to $17 to $19 per share on Wednesday as demand grew.
Shares then leapt to $27.40 on Friday before climbing even further to $48.40 in the afternoon. Analysts estimated the company could have sold its stock for a higher price in its IPO and raised more money.
Trading up with natural ingredients
The burger chain, created by restaurateur Danny Meyer's Union Square Hospitality Group, started life as a humble New York City hot dog cart. Now it is considered the latest in the trend of "fast-casual" chains that sell fresh ingredients, and has investors' mouths watering.
The firm plans to add at least 10 new US locations per year and to license the brand overseas. It currently has 63 locations globally, 31 in the US with most overseas sites in the Middle East.
Shake Shack, whose motto is "Stand for Something Good," cooks its burgers to order using hormone- and antibiotic-free beef.
It has been compared to the fast-growing burrito chain, Chipotle Mexican Grill, which also emphasizes food customization, high-quality ingredients, and the use of natural meats.
"There's a seismic shift in how people are eating today. People are trading up," Shake Shack chief executive Randy Garutti told US news network CNBC. "They're not eating fast food. They want more. They expect more."
bk/hg (AFP, Reuters)