It may not be fair to call any of the menu items at Shake Shack Inc (NYSE:SHAK) the worst. Despite its small size, the better-burger chain has garnered legions of fans who regularly form long lines for its burgers, shakes, and other treats. Shake Shack is set to do an average unit volume of over $5 million this year, nearly twice that of any other fast food competitor, a number that is a testament to its success and popularity.
However, there has been one item that has lagged behind the rest of the menu in quality and received its share of controversy: the fries.
While Founder Danny Meyer likes to call the chain "fine casual" and much of Shake Shack's menu is made up of gourmet ingredients, such as its proprietary blend of Pat LaFrieda ground beef that includes brisket and short rib, the fries it serves are of the frozen, crinkle-cut variety and not the hand-cut kind that one might expect of a chain of Shake Shack's stature.
Had Shake Shack started out differently, the fries may have been made more traditionally, but the original 400-foot Shack did not have enough to space to allow for fresh-cut fries. Over the years, the fries received their share of complaints from critics as well as customers, and were a thorn in management's side as they went against the natural ethos of the brand. So in 2013 the restaurant chain decided to make a change to hand-cut fries.
Unfortunately, the change didn't go as planned. Shake Shack's restaurants were not set up to prepare fries that way, making the process inefficient, and retraining employees was difficult. The company also ran into other unforeseen logistical problems, such as potatoes freezing on trucks. Worst of all, though, the company encountered a backlash from its customer base as the final product was inconsistent and the new fries did not live up to expectations. In the fall of 2014, Shake Shack reversed itself and brought back the crinkle-cut fries. It removed artificial ingredients and preservatives in the process, but they are still frozen.
The return of the crinkle-cut fries seems to be a victory for Shake Shack and its fans, and it could even be a hidden reason for the explosive same-store sales growth this year. However, it still undermines the overall brand, especially with the higher price point Shake Shack items carry.
Though the burger chain is more than ten years old, it is still in its relative infancy according to the plans it laid out for investors in its prospectus. Considering that Shake Shack has just 48 domestic locations at the moment and plans to expand to 450 over the years, it would be much easier to make menu improvements now, especially ones that would affect the layout of the kitchens. Competition in the fast-casual segment is heating up also, and peers like Five Guys stake their reputations on fries, giving them an apparent advantage over Shake Shack.
It's clear that Shake Shack's most loyal customers, many of whom are New Yorkers, prefer the crinkle-cut fry, but Shake Shack's inability to perfect the fresher potato could have consequences as it expands into new locales where people are less familiar and less passionate about its brand.
Jeremy Bowman owns shares of Shake Shack. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.