Shake Shack files for IPO

U.S. burger chain Shake Shack on Monday filed for an initial public offering of up to $100 million of shares. The company said it plans to list on the New York Stock Exchange under the symbol "SHAK." 

J.P. Morgan,  Morgan Stanley, Barclays, Goldman Sachs & Co, Jefferies, William Blair and Stifel are joint underwriters on the deal. The company, which has 63 outlets in the U.S. and overseas, said it had total sales of $82.5 million in 2013, up from $57 million in 2012 and $19 million in 2010.

• The $135-billion burger market. The company says burgers are the “largest dine-out segment” in the U.S., with more than $72 billion in sales last year. That makes it twice the size of the pizza market, the next largest category. Burgers are “the quintessential American meal,” but are also popular overseas, with an estimated global market size of over $135 billion, the filing says.
• Manhattan vs. the world. The company distinguishes the revenues and profit margins at its Manhattan locations vs. its non-Manhattan locations, saying the volumes in Manhattan Shake Shacks have historically been higher because of “the population density and overall familiarity with the Shake Shack brand.” Since most of its future growth is expected to occur outside of Manhattan, the company says investors are better off judging the company by its non-Manhattan numbers.
• Revenue is measured in “same Shack sales.” Forget “same store sales.” At Shake Shack, they measure performance in “same Shack sales.”  As of Sept. 24, that growth had been slowing down among the 12 Shake Shacks open more than two years. “Same Shack sales growth” slowed to 3.0% as of Sept. 24 from 5.5% the prior year. 
• International presence. There are Shake Shacks in Lebanon. And Saudi Arabia, Russia, and other countries. There are 27 international Shake Shacks in all, and they are licensed locations, not company operated. The filing says the international locations paid license fees of approximately $3.5 million in fiscal 2013. More could be coming. As the filing says: “we continue to attract substantial interest from potential international licensees around the world and have identified opportunities to expand our licensing footprint in existing and new international markets.”
• Product Placement sells. Shake Shack has appeared over and over again in movies, TV shows and other media. The company brags that instead of paying for the privilege, it’s charged fees for the use of its facilities. The filing boasts of appearances in the movies Something Borrowed and Tower Heist and “the acclaimed” HBO series The Newsroom. The burger chain has also been featured in segments on The Daily Show, Saturday Night Live, CBS Sunday Morning and Late Night with Jimmy Fallon.