Born in the year 2004, Shake Shack still has a lot of problems in the present market. These problems can be considered a threat to the company’s growth and progress. We all know how the restaurant business is competitive, and when it comes to Shake Shack, it is already in the domain where there are many companies that are doing the same business. So, basically, the company is competing with all the local, regional, and national service providers.
It is competing with the restaurants providing burgers, casual restaurants, and also the ones that are acclaimed for servicing quickly. Not only this, there are many competitors who have better financial resources when compared to Shake Shack, and there are many who are quite a big name as well. Now, with its IPO knocking on the door, you might be thinking about what needs to be done. This is why we are here to help you with all the answers related to it that can make it easy for you to make your decision. Let’s get started.
Is The Brand True Or Just A Fad?
You might find many restaurant brands claiming to be genuine, but it turns out simply a fad. When it comes to Shake Shack, this question certainly becomes a lot more important because of the IPO. When it comes to Shake Shack is a chain that is a part of a powerful consumer movement that has been staying strong in the market for years now. But, the movement has not yet helped them become big as they have hoped for. They are constantly trying to cash in on the demand surge, and as the demand remains high, they are certainly going to survive or even rise in the time to come.
Can Shake Shack Beat All The Odds To Be One Of the Bests?
The next important question that you might be thinking about is whether the company has what it takes to become one of the best in the respective field of service. When it comes to Shake Shack, the competitor’s list is quite long and even quite strong. The industry is crowded with facing competition nationally, regionally, and even locally. But, still, they are able to survive the market for so long. The best part is that demand is growing, so the chances of growth are always there.
If their IPO is successful, they are going to be benefited from funds that can be invested for the purpose of growth and enhance the chances of being the best in the business. But the process is going to take time with so many big names already there. You can still not think that Shake Shack does not have the capability. They do have the boxes to fill, and if they constantly move in the right direction with the IPO funds, things can certainly change in their favor.
Does Shake Shack Hasve the Ability To Grow Internationally?
The last thing that you might be thinking about is whether the Shake Shack. has what it takes to make a mark internationally as well. Currently, there are more than 30 outlets in the US. which leaves a lot of space for them to grow in the US market. But, when you look at the long-term base, the growth in this domain has skyrocketed elsewhere. The best part is that Shake Shack has already started working on it.
They are taking steps when it comes to getting their presence bigger and establishing their name internationally. And they already have invested in 27 international outlets in the UK, Russia, Turkey, and various parts of the middle east as well. Or they have also signed agreements in Dubai and Saudi Arabia as well. So this shows how this company is thinking about making progress in the time to come.
Last Words
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The Restaurant Industry in the United States
The US$259 billion figure was due to the full-service restaurant industry which includes premium dining along with fine dining. The restaurant industry with limited service accounted for 223 billion dollars of sales. These include traditional fast-food restaurants such as McDonald’s and the newest category of gourmet fast-food outlets, such as Panera Bread and Shake Shack. The restaurant industry can be classified into three broad categories:
1. Full-service (premium) restaurants
Premium restaurants account for 48percent of the sector. However it’s a dispersed market that is comprised of numerous small businesses as opposed to a few large ones. Market players want to maintain the reputation of providing an exceptional, enjoyable, and memorable experience for customers. Even if they are able to create new eateries, however, they tend to be reluctant to do so because it could harm their reputation in the eyes of their customers.
The major advantage of this segment is that consumers will pay high prices for the top-quality dining experience available. However, the nature of the market is fragmented. of the market means that customers are able to find alternatives and new restaurants can be introduced to the market fairly quickly. Furthermore, restaurants that are rated as premium don’t have a lot of bargaining capabilities in dealing with suppliers. Most of the time the ingredients used are limited, which forces premium restaurants to pay prices on the market.
2. Fast food fast-food restaurants with limited service
This restaurant category is massive. Nine of the top establishments within the United States by revenue come from this group. Despite its dimension, it is an average market in the red ocean that is dominated by McDonald’s at present. The growth of these companies is mostly dependent on massive budgets for media in addition to the economies of scale. Customers have a wide range of fast food options to pick from, which makes price an important factor for competitiveness in this industry. Unsurprisingly, the fierce competition between the competitors is supported by huge marketing budgets.
But, those in this sector benefit from two factors. The first is the steep barriers to entry. In other words, new fast-food eateries simply can’t be competitive with the economies of scale. Or the brand recognition of chains that have been around for a long time. The second issue is the limited bargaining ability of their suppliers – fast food establishments can bargain for the best price since there is a myriad of suppliers of flour, meat, and potatoes available.
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