Shake Shack CEO: 'We Want to Be the Anti-Chain Chain'
Can the company achieve global burger domination without becoming a soulless corporation? CEO Randy Garutti explains how he plans to do it.
Flickr/jameskadamson
The goods.
The stereotypical New Yorker is hard charging, action oriented... and maybe just a tad (OK, more than a tad) impatient, right?
Yet that same person is willing to stand in incredibly long lines every day... for burgers, hot dogs, fries, and frozen custard.
Sounds hard to believe, but it's true. Shake Shack fans can be die-hards.
This is another in my series where I choose a topic, pick someone smarter than me (finding smarter people is turning out to be way easier than my ego enjoys), pick a topic, and trade emails. To find other articles in the series, go here, here, here, and here.
This time I talked to Randy Garutti, the CEO of Shake Shack, a business that started as a hot dog cart in 2001 and grew to become a global restaurant chain. (Shake Shack is part of Danny Meyer's Union Square Hospitality Group.)
Here's my premise: Once you grow to a certain size, even the most idealistic and principled small business becomes more corporate and, in short, "sells out."
Jeff: It happens all the time in almost every industry. Classic example: The funky guy in the converted warehouse who builds amazing furniture... and then one day his stuff is in every Pier 1. When that happens, some of your most loyal and vocal fans can become your biggest detractors, because they feel you've tossed aside what you once stood for.
Shake Shack has grown from a hot dog cart to one iconic kiosk in Manhattan's Madison Square Park with incredibly long lines to numerous locations in the city, in other states, and even Dubai. From the outside, it could appear you guys sold out and are going for the big bucks.
Randy: Let's start with this: Shake Shack was a complete accident. It all began when Danny Meyer and the Madison Square Park Conservancy decided to raise funds to turn the park around. Keep in mind that 13 years ago, we were fine-dining people who had Union Square Cafe and Gramercy Tavern, and we had just opened two restaurants, Tabla and Eleven Madison Park, situated on an underappreciated park.
With Shake Shack, we had the opportunity to do something different and fun. It started with creating a hot dog cart to support a local art project. Out of the gate, and continuing through three consecutive summers, the cart was a massive success, and lines formed throughout the park all because we took a basic idea, focused on people's experience, and just made it better. So, in 2004, Shake Shack was born.
Jeff: Wait. You had no long-term plan? No long-term vision? No blueprint for success? Heresy. How dare you.
Randy: When we first opened, we had no idea what was about to happen. We certainly never dreamed there could ever be a second location. But we kept asking the question, "Who wrote that rule?"
We posed that question on everything we did: Why can't burgers be ground fresh every day from the best cuts of beef? Why do ranchers have to use hormones and antibiotics? Why can't milkshakes be handspun from ice cream, or in our case frozen custard, that is made fresh all day long? Why can't a burger joint have a happy team, one that's well taken care of, to provide the same hospitality you expect from our fine-dining restaurants?
And so it went. We asked this question about everything we did, and every year, we just got busier, the lines just got longer, and we kept having more fun.
Jeff: I could argue that opening more locations might have taken the fun out of it--and with the success of all the other Union Square Hospitality Group ventures, it's not like you "needed" to open more locations. Add the fact that many businesses start going backward the day they take a big step forward, and you were taking a pretty big risk, one that wasn't just financial.
Randy: It took us five years to open our second location on Manhattan's Upper West Side; hardly a sellout and hardly a plan for world domination. We simply saw Shake Shack as a fun opportunity as we focused on steadily growing our overall company.
Then something amazing happened. The original Shack actually got busier when we opened the second. Then, in 2009 and 2010, when we opened a few more here in NYC and one in Miami, all of the Shacks got busier.
It was at that point we made the decision to grow, and here we are today with 16 Shacks, some in other states and even other countries.
Now, let me get back to your question.
It's my belief that the term "selling out" is highly misused. Companies that grow, and grow well, deserve it. Who would argue that the world isn't a better place every time Stonyfield Farm produces more yogurt? A dairy farmer can now produce milk the right way, make a living in a tough industry, and their consumers now have healthier options--hardly a sellout, and certainly a great growth story.
Why wouldn't you want to see Timberland sell more boots when they are great stewards of the environment in which their gear is used?
Why wouldn't you want to eat at Chipotle when you know they are striving every day to improve the supply chain, support small and local farms, and change the way the world thinks about fast food?
We want to be the best burger company in the world--for our guests and for our team. We believe we have a unique opportunity to build something truly special.
A picture hangs on my office wall to remind me and everyone who walks in my door that this is our key: "The bigger we get, the smaller we need to act."
Jeff: So how do you deal with the inevitable "systematization" of a business as it grows? Growth means more processes, more procedures, more guidelines... more everything.
