Shake Shack investors benefit from strong listing on the stock market
Shake Shack IPO made a strong debut on the stock exchange, offering amazing return to investors. The fast-casual chain of food joints claims to offer healthier snacks to customers. On the listing day, Shake Shack has been valued at $1.7 billion by investors.
The IPO has been successful in rewarding investors with nearly 130 percent return on listing. The emergence of Shake Shack could become a trouble for McDonald's, the fast food giant which hasn't been performing well lately.
McDonald's CEO Don Thompson will step down by the end of February and Chief brand officer Steve Easterbrook will take over the control of the largest fast-food chain in the world. McDonald's has a tough task ahead, to reinvent itself and offer more to consumers.
Shake Shack is doing a few things better than the competition. The company offers more menu options to consumers. Shake Shack also offers more than minimum wages, to entry-level staff, a phenomenon not seen in the fast food business.
CEO Randy Garutti's 2.7 percent stake in Shake Shack is now worth $46 million. This marks the second IPO in the month of January after Box, to offer amazing returns to investors. Fast-casual chain Shake Shack will have to compete with Chipotle and McDonald's and the company will need to change as per consumer preferences.
Shake Shack claims to use natural products and healthy ingredients. It distances itself from food that has higher amount of antibiotics and hormones. What Shake Shack offers different from the competition, will come up in few months when some health advocacy groups will do a fact check on the offerings of the company. McDonald's has been criticized by health experts in the past for serving food that increases obesity and causes other health issues.
Shake Shack will soon improve its store count. The company has recently entered Chicago and Las Vegas. The company has plans to expand to more markets this year, including Austin, Texas.
For the moment, investors have been rewarded by the exceptional listing of Shake Shack. The next few quarters will be crucial for the company to maintain its market valuation.
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