Inside the (possibly) $1 billion Shake Shack IPO
Shake Shack Inc. filed for an initial public stock offering last week. That caps an amazing run for a concept that began in 2001 as a hot dog cart in New York City鈥檚 Madison Square Park. The prospectus filed with the Securities and Exchange Commission lists the proposed maximum aggregate offering price as $100 million;聽聽says the company aiming for a valuation of $1 billion. Shake Shack will trade on the NYSE under the symbol SHAK.
陇聽The prospectus offers interesting data about and insights into the Shake Shack brand. Among them:
陇聽Shake Shack defines itself as 鈥�a modern day 鈥渞oadside鈥� burger stand聽serving a classic American menu of premium burgers, hot dogs, crinkle-cut fries, shakes, frozen custard, beer and wine.
陇聽There are 31 domestic company-operated Shacks, five domestic licensed Shacks and 27 international licensed Shacks.
陇聽In fiscal 2014, the company opened 10 domestic company-operated Shacks. Shake Shack plans to聽open at least 10 new domestic聽company-operated Shacks each year, beginning in fiscal 2015, for the foreseeable future.
陇聽It is its own category: 鈥淲e believe Shake Shack has become a compelling lifestyle brand and has helped to pioneer the creation of聽a new fine casual category聽in restaurants. Fine casual couples the ease, value and convenience of fast casual concepts with the high standards of excellence in thoughtful ingredient sourcing, preparation, hospitality and quality grounded in fine dining. As a pioneer in this new category, we strive to maintain the culinary traditions of the classic American burger stand, while providing our guests a menu of chef inspired food and drinks.鈥�
陇聽During the three fiscal years ended December 25, 2013, Shake Shack grew from seven Shacks in two states to 40 Shacks across six states, Washington, D.C. and eight other countries, representing a 79% compound annual growth rate (鈥淐AGR鈥�).
陇听In fiscal 2013, the domestic company-operated Shacks had Average Unit Volumes (AUV) of approximately聽$5.0 million, of which the Manhattan Shacks had AUVs of approximately $7.4 million and the non-Manhattan Shacks had AUVs of approximately $3.8 million.
陇聽International licensed Shacks had AUVs of approximately聽$6.1 million聽in fiscal 2013. Systemwide sales for the brand (which includes combined revenue from all domestic company-operated Shacks and domestic and international licensed Shacks) was $139.9 million for fiscal year 2013, compared with $81 million for the previous year.
陇聽During the three fiscal years ended December 25, 2013, total revenue grew from $19.5 million to $82.5 million, a聽62% CAGR. Net income grew from $0.2 million to $5.4 million.
陇聽Domestic company-operated Shacks have delivered an average cash-on-cash return of 65% and payback period of 1.5 years. The Manhattan Shacks generated an average cash-on-cash return of 82% and payback period of 1.2 years while non-Manhattan Shacks generated an average cash-on-cash return of 31% and payback period of 3.2 years.
陇聽Approximately 3% of revenues from domestic company-operated Shacks is attributable to the sale of alcoholic beverages (beer and wine).
