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Shake Shack Inc Flexes Its Muscle With Limited-Time Offers

By Jeremy Bowman - Sep 22, 2015 at 8:00PM

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The better burger chain is teaming up with top chefs to deliver exclusive creations.

Shake Shack Inc (SHAK 3.07%) stock blew through the roof again earlier this month, surging 13% in one day. The reason? Investor excitement over a new limited-time offer.

The high-end burger chain said it was partnering with well-known restaurateur and chef Ford Fry to deliver a special burger to its Atlanta customers on one day only: Saturday, September 19. The Carpetbagger burger features a butter-grilled double cheeseburger topped with smoked and caramelized onions, house-made pickles, Comeback sauce, and a crispy fried oyster. Only 200 were made available. 

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The carpetbagger burger. Source: Shake Shack.

The carpetbagger was just the latest iteration of Shake Shack taking a tried-and-true staple of fast food, the limited time offer, and injecting it with its own brand of upscale deliciousness. Other LTOs from Shake Shack this year have included the Shackmeister, a cheeseburger topped with crispy marinated shallots and Shacksauce, and the Roadside burger, which includes caramelized onions. 

Limited-time offers are a standby of traditional fast food. Companies like McDonald's use temporarily available menu items like the McRib to drive traffic, create buzz, and even test out new permanent products. While some fast-casual chains like Chipotle have avoided using limited-time offers, the tactic is a useful one when employed properly. With its recent partnerships with top chefs, Shake Shack is also demonstrating that its brand is powerful enough to attract such high-profile names for these kinds of promotional events. Fry, who now owns several popular restaurants in Atlanta, said, "Looking at the chef partners that Shake Shack has paired with in the past to create collaborative burgers, I'm super flattered to be asked." 

Now in London
Shake Shack's latest chef partnership is with Sat Bains, a two-star Michelin chef who will create 500 of a burger known as Major Oak, inspired by a tree in Sherwood Forest, at Shake Shack's London Covent Garden location on Oct. 9. The burger will come with fresh shallots, a slice of blue Beauvale cheese, forest-inspired ketchup made with seasonal mushrooms, and smoked mayo. The burger will cost 7.25 pounds, or around $11. 

Shake Shack's chef partnerships are just one more thing setting it apart from the average fast-food chain. It's highly unlikely, a Michelin-starred chef teaming up with an ordinary chain, but Danny Meyer-founded Shake Shack brings a gourmet twist to the traditional burger joint that other chains cannot match.

It also shows the Shack's ability to generate buzz and expand its menu. Over the summer, Shake Shack introduced a new sandwich that promises to become a fixture on menus nationwide, the Chicken Shack. Now available only at the company's three Brooklyn locations, the Chicken Shack sandwich was so popular that it sold out within two days of its debut, and the company could not replenish it until a week later. CEO Randy Garutti, said, "The guest response in the restaurants and on social media has exceeded our expectations." 

While there's little doubt about the success of Shake Shack the company; the stock has come under constant criticism of being overvalued, and with a P/E ratio in the triple digits, it's easy to see why. But investors may be underestimating the potential of Shake Shack to reinvent itself and expand its reach. New sandwiches like the Chicken Shack and events like the Carpetbagger and the Major Oak should keep the brand buzzworthy and bring in more frequent visits. That's important as Shake Shack expands to suburban malls and other locales that are unlikely to have the draw of some of its NYC locations.

If the company can maintain its fervent base, profits should continue to grow faster than expected.

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Stocks Mentioned

Shake Shack Inc. Stock Quote
Shake Shack Inc.
$43.27 (3.07%) $1.29
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$1,289.79 (-0.33%) $-4.32

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