Shake Shack moved towards its impending IPO today, releasing their preliminary prospectus to the Securities and Exchange Commission this morning. In it, the chain lays it all out, from tracking their growth through the years; concerns about future expansions; and the absolutely ridiculous names they almost went with at the outset.
In the document, the chain explores its explosive expansion, from 21 Shacks in 2012, to 40 in 2013 and 60 in 2014. Of those, half are franchised locations, which contributed just $4.7 million to the parent company's revenue in 2014. All told, the chain raked in nearly $140 million in sales in 2013, a huge increase over the $81 million they did in the previous year. Shake Shacks states their operating profit per Shack is around 25% but a closer inspection reveals their overall margin is 4.4%; on the $78 million they made on their US stores in 2014 (through 9/24), they only made $3.5 million in net income.
Other fun facts from their big reveal: Custard's First Stand, Dog Run and Madison Mixer were alternate names considered before settling on Shake Shack. They fear employee unionization, high health care and labor costs and other risk factors could adversely affect business.
Exciting as owning a wee portion of Danny Meyer's empire may be, Gothamist financial adviser Jake Dobkin advises against it. "Bottom line is never buy at IPO unless you are an insider who works at Goldman Sachs—everyone else is a sucker. Invest in index funds and use your diversified capital gains to buy hamburgers whenever you want."
