Shake Shack more than doubled its IPO price on its market debut

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Shake Shack employees carry delivery bags from an outpost in New York City. The company’s shares closed at $ 45.90 on Friday.Credit Lucas Jackson / Reuters

Updated, 8:49 pm | Customers are known to queue for almost an hour to order a burger and wavy fries at Shake Shack. Similar enthusiasm for the company’s shares was shown on Friday.

The company’s shares more than doubled in their first day of listing, valuing what was once a humble hot dog cart in Manhattan’s Madison Square Park for more than $ 1.6 billion.

At the close of trading, the company’s shares, which trade under the symbol SHAK, closed at $ 45.90 after being valued at $ 21 the day before.

This public debut – following an initial public offering that had already exceeded expectations – revealed a level of enthusiasm rare on Wall Street for the self-proclaimed “modern day roadside” burger joint.

“Nothing surprised us more than a hot dog cart that we launched 14 years ago and which has become Shake Shack,” said Randy Garutti, CEO of the company.

Shake Shack’s offering was the latest from a so-called fast-casual restaurant, chains like Chipotle that basically serve better quality fast food at higher prices. Investors have already flocked to previous public offerings from companies like Zoës Kitchen, El Pollo Loco and Habit Restaurants. All of their stocks have jumped since their IPO.

Traditional fast food behemoths, on the other hand, have seen sales plummet as they try to catch up with modern tastes.

Shake Shack prides itself on being something of an anti-McDonald’s, using premium beef for its flat-grilled burgers and delivering what it calls a high level of hospitality to its customers, which it calls “Guests”.

But Shake Shack brings something else: the pedigree of Danny meyer, the famous New York restaurateur who started the business on a sort of lark to draw crowds to Madison Square Park and provide additional jobs for staff members at one of his nearby restaurants.

Since the summer of 2001, Shake Shack has grown into a mini-empire of 63 restaurants with outposts in London, Dubai, Turkey and Las Vegas. Its ambitions go much further: the company intends to expand to at least 450 restaurants by opening 10 new ones each year.

“What we’re looking for is a long, very long growth opportunity,” Garutti said.

The explosion of investor enthusiasm has enriched both Mr. Meyer, whose fortunes have jumped by $ 340 million, and many Shake Shack employees who own shares in the company.

The offering attracted enormous attention from all corners. The New York Stock Exchange has adorned itself for the occasion with green line drawings of burgers, hot dogs and shakes. Company insiders received a personalized version of the buzzers that alert customers when their order is ready.

And hundreds of people lined up outside the Big Board – unofficially renamed the “New York Shack Exchange” in honor of the stock sale – for a chance to grab a free burger.

“It’s like a bread line in the Depression,” said Michael Lehtman, 37, who was walking with his colleagues at a brokerage firm they refused to identify.

“We are debating whether to stand in line,” said Sharad Kumar, 26, a colleague, who took a photo on his iPhone.

same People for the ethical treatment of animals revealed he bought shares in the company to gain the right to speak at annual meetings and demand vegan offerings.

Some analysts said the company faces many challenges, such as maintaining its quality of service, increasing profitability and tackling burger fatigue. But Garutti said the company would stay on track with plans to create what he said was “the best burger company for the next generation.”

“I don’t think the world is going to get bored of burgers anytime soon,” he said. “And the investors involved today and the investors to come know that we are just getting started.”

William Alden contributed reporting.

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