Fast-casual, but upscale burger chain Shake Shack is making its debut on the New York Stock Exchange Friday. The initial public offering from cult-favorite has been very well received by investors, with the underwriters raising the price range on the Shake Shack IPO earlier this week due to strong demand.
The new public company will begin trading at around $19 a share, giving it a market cap of close to $750 million. The adds up to at least $155 million for founder Danny Meyer. The firm reported $5.4 million in net income in 2013 with $82.5 million total sales.
Danny Meyer’s Shake Shack
Well-known New York restauranteur Danny Meyer opened a “Chicago style” hotdog and hamburger stand back in Madison Square Park back in 2001, and it was an instant hit. The chain has now grown to 63 outlets in more than a dozen cities worldwide.
Shake Shack is based on Meyer’s culinary experiences as a young man. He grew up in St. Louis, where beloved burger chain Steak ‘n Shake was born. He also fondly remembers the frozen custard at Ted Drewes, which began selling Christmas trees and frozen custard in the 1940s. Ted Drewes introduced the concrete, an extra-thick shake with mix-ins in the 1950s, and this dessert beverage has become popular menu item at Shake Shack.
Shake Shack IPO reflects growth in fast-casual restaurant segment
Most Americans grew up on fast food, but many have a love-hate relationship with the segment. A new generation of burger chains like Shake Shack, Five Guys and Smashburger popped up around 15 years ago to offer a high-end alternative to Mickey Ds, and have been highly successful.
Shake Shack is another fast-casual restaurant that focuses on the quality of their ingredients and the “authenticity” of their food.
This success led many of these firms to go public. For example, shares in Zoe’s Kitchen have doubled from the Mediterranean chain’s IPO, and shares in El Pollo Loco have moved up 76%. Habit Restaurants have also performed well, up more than 80% since the company’s November IPO.