Courtesy of Benzinga.
As shares of Shake Shack Inc (NYSE: SHAK) began trading at a hefty premium versus its initial pricing, investors may begin to question of the nearly $700 million valuation for a chain that operates only 62 locations is justified.
Brian Sozzi of Belus Capital Advisors commented in an article on The Street that Shake Shack will face heavy competition but the restaurant operator could keep its stock hot if it follows three simple steps.
Step One: Preserve Its Unique Culture
Shake Shack's business model is its concept of “Enlightened Hospitably” which means “caring for each other, caring for our guests, caring for our community, caring for our suppliers and caring for our investors.”
Shake Shack's unique culture stands in contrast to that of McDonald's Corporation (NYSE: MCD) which has a reputation of offering employees low wages and unfair treatment in the workplace. According to Sozzi, Shake Shack will need to stay true to its commitment to its stakeholders at a time when shareholders will expect strong profits.
Step Two: Establish An Image Of Being A Lifestyle Brand
Shake Shack will need to continue adding more seasonal menu items for breakfast, lunch and dinner and expand to the supermarket aisles by selling its shakes, frozen burgers and French fries.
Sozzi believes that by doing so the company can replicate Starbucks Corporation's (NASDAQ: SBUX) brand image as it sells beverages and packaged coffees in supermarkets.
In addition, Shake Shack will need to hold additional events similar to its annual “Shacktoberfest” which consists of 10 days of special-edition beers, burgers and other treats to deliver an elevated profit level that is now expected by Wall Street.
Step Three: Deliver The Goods
The final step for the company is executing its plan.
According to Sozzi, investors are expecting “super-sized performance” from Shake Shack – but the company has lots of work ahead to secure more suppliers, preserve its employee culture and find success in new locations outside of Manhattan, New York.
Posted-In: Belus Capital Advisors Brian Sozzi fast casual Fast FoodAnalyst Color Restaurants Analyst Ratings General
