Shake Shack is preparing for a digital revolution, and it’s beginning by building a solid, virtual foundation.
To say the channel exploded this year would be an understatement. In March, digital sales mixed 23 percent, but after mass dining closures in the spring, the business grew to 81 percent in May. In the final six months of 2020, the channel settled at 59–62 percent. In Q4 specifically, app/web sales increased 3.5x year-over-year, and the company retained more than 90 percent of the digital high point in May. Shake Shack managed to gain 1.8 million first-time app/web purchasers since early March.
“With dining room restrictions still in place to quite a significant degree across the system, these digital products remain really critical to our ability to continue to operate, continue to serve our guests, and continue to deliver this forward and improving momentum that we’re seeing in our sales numbers,” CFO Tara Comonte said Tuesday during this year’s ICR Conference.
A key tenet of Shake Shack’s digital foundation is launching innovative ordering experiences.
The brand rolled out curbside pickup in July, which is now in place at roughly 70 stores, primarily in suburban markets with enough parking. About 150,000 unique consumers have used curbside since its launch six months ago, and 30 percent of that have been new guests. Shake Shack has found curbside brings a higher average check and elicits positive feedback from consumers because of the convenience and safety aspects, the company said.
To further enhance off-premises, Shake Shack is currently testing delivery through its mobile app at three Miami stores. The technology enables geo-location and real-time map-based order tracking, ownership of transaction and guest relationship data, price testing and differentiation from third parties, and the opportunity for personalized messaging. Shake Shack expects a full systemwide rollout through Q1 and Q2.
THE COVID-19 ROAD FOR SHAKE SHACK SO FAR
Additionally, Shake Shack is in the process of fully rebuilding its website and mobile app, both of which should launch in the latter part of 2021. The purpose of the update is to create a more visually pleasing and engaging experience, especially when it comes to ordering capability. Comonte said the reimagined web/app will allow for new merchandising opportunities, improved cross-sell and upsell, and integration with Shack Track, the brand’s innovative pickup ordering process.
“We’re in a moment where all this digital infrastructure or these digital investments are really beginning to be fully integrated into that physical experience, and that’s a really key piece of that journey,” Comonte said. “So all the Shack Track opportunities, the different digital pre-order and pickup options that guests will have, will be fully within our web as well as white label delivery.”
Along with these upgraded digital channels will come new, contactless forms of payment, including Google Pay, Apple Pay, and digital gift cards. This not only allows Shake Shack to link purchase behavior across in-store POS and digital channels, but it also strengthens security and privacy management.
From a business perspective, Shake Shack is able to take the informative data learnings from these amplified channels and improve marketing efficiency, deliver insights that feed into growth strategies, and target unique segments.
For example, Shake Shack will have the ability to reactivate specific users within a to-the-mile radius of specific stores and send timely messages to users that are most likely to purchase.
“The point being, we can communicate with our guests or we will be increasingly able to communicate with our guests on a much more granular level, a much more insightful, a much more relevant level, than we typically have in the past,” Comonte said. “And also identify those segments depending on where they are within the overall purchase lifecycle, whether we talk differently to guests we’re trying to acquire versus guests that we’re trying to reengage and drive frequency and engagement or a lapsed guest that we’re trying to reactivate.”