Today is a day that will go down in New York Stock Exchange History: The exchange was temporarily renamed the New York Shack Exchange in honor of NY-based burger giant Shake Shack's IPO, which went live on the trading floor this morning. The stock was listed at $21 — far higher than its expected price — and quickly more than doubled over the course of the morning. CEO Randy Garutti and founder/hospitality mastermind Danny Meyer were on the scene and their facial expressions say it all.
We were able to chat with CEO Randy Garutti earlier today to get his reactions to all of the excitement and find out what the IPO means for Shake Shack and Union Square Hospitality Group.
Congratulations — this must be quite a day. Where are you right now?
Thank you, thank you. I am at the New York Stock Exchange, which has been temporarily renamed the New York Shack Exchange. We're giving away free burgers!
How are you feeling about the IPO?
You know what, we are so happy. I'll tell you what has been the most exciting part of this day, so many of our team members who built this company and who will continue to build this company, became shareholders today.
Did every Shake Shack employee get stock today?
Every single member of Shake Shack's management team has been rewarded with stock, including managers at every Shack location. All salaried managers got stock options today. But even our hourly employees, even part-time employees were able to purchase stock at our exclusive price last night. It's an expression of a part of the culture of enlightened hospitality that's built this company.
Is the team at all nervous about having a group of stockholders depending on them?
You'd have to ask them. I can tell you how I feel. I think it's very much in concert with everything we've done. We've always said: "Let's take care of our team first," and when we do that they will take care of our guests, our purveyors, our partners, and now, our stockholders. And that's been said since day one of our company and that doesn't change today.
What are your thoughts about food costs now that Shack Shack is publicly traded? Are you concerned about competing with others in the market that operate with lower food costs?
I won't speak for other people's food costs, but we have always been committed to no hormones, no antibiotics. There's no corn syrup in our frozen custard. Every decision we make is for the premium quality of our food. We've noticed that people are willing to pay for where their food comes from. Our shareholders are very confident in our ability to execute our plan, and to make sure that food quality improves as we grow.
The filing with the SEC states: "We plan to open at least 10 new domestic company-operated Shacks each year, beginning in fiscal 2015, for the foreseeable future...." with the potential for at least 450. Where will that growth occur? Is the West Coast high on the list?
The furthest West the Shack burger has made it thus far is Las Vegas, but there's no question at some point we'll get to the West Coast. Today is not that day. This is about the right pace and an appropriate growth plan. Most of that will happen immediately by deepening our roots in our current home base, but from time to time we will jump out into other markets as we have done with Las Vegas and Chicago.
Also from the filing: "We believe there are additional international markets that will embrace the Shake Shack concept." Where precisely will Shake Shack expand outside of where they are now internationally? Is Asia on the list?
Yes, we've spent a lot of time in Asia looking around, understanding those markets, talking to potential partners over the past few years. We're really cautious about our international growth, and when we grow there we will do it with a great partner that will sustain our level of service. We're excited that Shake Shack has this global brand that means it already reaches these markets, and that interest in these markets is strong.
How, if at all, does the IPO impact Shake Shack's relationship with the rest of Union Square Hospitality Group?
For a lot of time Shake Shack has operated separately from USHG. Danny will continue to be our largest shareholder, will continue to taste burgers, and will continue to be the Danny Meyer that has been known by this brand. But we have our own infrastructure, so there will be very little change there.
What does it mean for USHG's notions of hospitality to be beholden to stock holders?
I think I said it earlier. Enlightened hospitality. We're beholden to every stakeholder in our company, and they will take care of our shareholders. This is an opportunity to increase the culture of hospitality across this brand. We'll continue to make decisions the same way we do today and the same way we did yesterday, one burger at a time.