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Shake Shack CEO Randy Garutti on Building an 'Anti-Chain' Burger Company

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Photo: Daniel Krieger

New York's cultishly beloved burger restaurant Shake Shack has been on an expansion tear as of late, moving into cities along the East Coast and even international cities such as London and Istanbul. So how does a restaurant maintain its identity as it expands across the country? Earlier this month, Eater met up with CEO Randy Garutti for some SmokeShack burgers at Shake Shack's Upper East Side location in New York. In the first part of the interview, Garutti talked about building an international company out of what was originally just a hot dog cart. He also shared Shake Shack's "opportunistic" approach to expansion, why they look for spots near Whole Foods, and what it's been like watching Shake Shack become a cultural icon.

I know you've said in interviews that Shake Shack was an accident. When did you decide to roll with that accident?
It is absolutely an accident. I remember it goes all the way back to 2001 when it was a hot dog cart. Then Shake Shack got created in 2004. Then it wasn't until the end of 2008 that the second Shake Shack opened on the Upper West Side. So it was four and a half years in between. That's the beauty of it. People come to us all the time and say how did you guys do it? And we say, "We did it because all we wanted to do was make one great community gathering place and we did that at Shake Shack." And, of course, we had great food because that was our fine dining heritage. It's always important to remember that. We had incredible hospitality because that's the Danny Meyer way.

We never set out to have an international company. And then when the second one opened on the Upper West Side and it was as busy as the first, we said, "Whoa, wait a second. People are really resonating with this idea that we've created." It took another two years really to start opening a couple. And we've only done four Shake Shacks a year. This year will be more than that. We're going to grow quite a bit. We're going to open in Istanbul in June. And then we're going to open in London this summer. We are really excited.

So yeah, that's the beauty of it. When people come into my office, there are two things on the wall. One thing is the original Danny Meyer back of the napkin where he wrote down what he wanted Shake Shack to be. And every time we make a decision, I point to that and I say, "Would it fit that? Do we act like we only have one restaurant?" And then the second thing is, "The bigger we get, the smaller we need to act." That's how we make decisions. Would you make the same decision if you were one restaurant? That keeps us being the anti-chain, it keeps us thinking small and using our culinary heritage. Decisions that affect this place need to be decided on as if it's only this place. This is the Upper East Side Shake Shack and decisions need to make sense here. And that makes it hard to grow.

How does it make it harder for you?
I think what most companies would do is say, "Well, here is the design. Now let's just parachute that into wherever we go." We just opened in Chestnut Hill near Boston last week. It's been one of our most successful openings ever, in the suburbs of Boston. When we designed that restaurant, we found reclaimed wood from an old paper mill in Holyoke, Massachusetts, and we used that. We take the time to design it to feel like the place where it's in. When you do that, it takes time and talent and resources that most other chains would not want to spend. That's what makes each Shack feel special and different.

You've said when the Upper West Side opened, the original location got busier.
They've all gotten busier when other New York ones have opened.

Did that surprise you at first?
No, because since 1985 when we opened Union Square Café, Danny has always said we will not open another restaurant unless the ones we have get better in the process. We need to get better, not diluted. We won't open a restaurant until we have the team that's ready to grow. And then it gives those guys opportunity to grow. We have some of our best leaders who moved to Boston to open. And we keep growing more leaders. We won't keep growing until we have leaders and a team to make that work.

So what is it that you look at when you're looking at locations?
The most important thing is to find a space where the community wants to gather, where it's sort of a crossroads of humanity of every demographic you can imagine. Look at every site we've chosen. Like this one, you have the whole Upper East Side here. You have the express subway here. You have workers from everywhere. You have cops next to lawyers next to people who work down the street at another fast-casual or whatever kind of restaurant. So we really want to balance that. And then we just need a great space that feels like it could feel like Shake Shack. This building here, look at the roofline. It's very similar to the original roofline at the original Shack. We didn't do that. So when we saw it we said, "This feels like a Shack." And this [outdoor dining area] feels like Madison Square Park. That's the idea.

How about for the cities you go into?
It's usually more opportunistic than it is strategic because we just want to feel really good about where we're going. So we went to Miami, it was the first city outside of New York that we would build a Shake Shack. Why would we do that? Not because we said Miami is the place we must go. It's because we found an incredible developer doing an amazing project and we wanted to be a part of it. So we opened in Miami. Same is true in Boston. People said, "Why didn't you open downtown?" Because this one felt like a better community gathering spot than the best site we could find downtown at that time. So we decided to do it.

City dwellers must be really bummed out.
We're working to try to get closer to 'em and hopefully we will someday. But it's tough to find the right spot. So we're just looking for cities where we can be us, we can create a community gathering spot. When we find the right particular location, we'll go.

You're going for multiple sites in Philadelphia and DC. Is it once you find a city you like you try to expand out from there?
Yeah because we need to learn about those cities. Once we open there, we learn a lot from the guests of those cities, how they're the same, how they're different, and where it might make sense to go. Once we know and we have great success in DC and Philly, we want to grow.

How do you research the city?
We're pretty good at understanding real estate and then we always listen, listen, listen. We listen to friends who we know who might live there, people on our team who might have gone to college in that city, family. We constantly take input from those kind of people. Then we have professional real estate people who will talk to us about things. And we constantly want to be around great brands. So if there's great development or a great building in a great neighborhood, then we want to be there.

You must get approached from lots of developers in lots of cities.
All the time.

How do you know when to say no?
We say no about 99 percent more times than we say yes. We just constantly say no because there's a lot of opportunity for us obviously being a popular brand like we are. People want us as part of their project or building. But again, if we don't feel like it has the community aspect, if we don't feel like we've got leaders who want to be there? And we want to make sure that the full community wants it and is really excited to have it. Then we'll go.

How do you gauge that?
Usually they're asking for it. Usually we'll have people who say, "I wish you could bring a Shake Shack here." It's also obvious when the community supports other brands that we would like to liken ourselves to. So if you've got a successful Whole Foods a block away, you know that those are the same people who are going to eat at Shake Shack. And an Apple Store. People who it says something about them as to what brands they associate themselves with are the people who dine at Shake Shack. I mean, it means as much for a Whole Foods shopper to have everyone else know they shop at Whole Foods as it does to actually go to Whole Foods. It's about the statement you make.

And you guys have been part of this stadium dining improvement.
Citi Field just opened on Monday. Nationals Ballpark in Washington, DC. We're incredibly busy at both. It's great. Even in a tough season like last year, the Mets attendance wasn't as high, it's still an amazing year for Shake Shack. People tell us that's what they want. If you're going to choose to eat [a burger], it might as well be good.

So is that something you want to do more often? And you've got the airport.
We're opening in JFK, which we're really excited about. We didn't set out to say let's go open in airports. But we've had a longstanding relationship with Delta for a lot of years through the Mets and through parks and so many great things that Delta does. This is our home turf. This is New York City. We should be the people serving burgers in what will be one of the best if not the best terminal in JFK.

To welcome people to the city.
Exactly. I mean, Shake Shack in Madison Square Park has become one of the top few things people from in or out of New York want to do. If you come to New York, you're going to go see the Empire State Building, you're going to go see Central Park, and you're going to go see Shake Shack. You are. It's an amazing thing.

How was it for you watching it turn into a thing like that?
Crazy. When we would see someone on line that would have a Japanese guidebook and they'd show us, "You're in this Japanese guidebook." We had no idea, of course. Isn't that incredible? And you see that when you go to the theater district location, on 44th Street. You'll really see the most international population going there. It's incredible.

Stay tuned tomorrow for part two of the interview in which Garutti talks about the importance of training a team and how Shake Shack ensures consistency as it expands.

· All Shake Shack Coverage on Eater [-E-]
· All Burger Week 2013 Coverage on Eater [-E-]

Shake Shack

154 E 86th St, New York, NY