Shake Shack’s Ecommerce Shake Up

Up Next In Commerce

By Mission

Shake Shack’s Ecommerce Shake Up

Thursday, 17 June

When Steph So joined the team at Shake Shack in 2019, she was excited for the opportunity to grow the digital side of the famous burger company. She had set high ambitions, hoping to grow their digital channels between 25 and 50%. So when COVID hit, and all of a sudden digital grew by 400%, you’d think that Steph would feel like she bit off more of that burger than she could chew.

Not so fast, because as Steph says, digital can scale, and much like you can uplevel your combo from a medium to a large, Shake Shack was able to handle the higher traffic while at the same time coming up with new, innovative ways to make the customer experience on digital even better. 

On this episode of Up Next in Commerce, Steph explained how she and the team handled an influx of 1.8 million new customers within a year and how they created the most seamless digital experience possible. Steph says that the secret Shack sauce on top of the digital experience all comes down to choice. The success of the company depends on giving the customers everything they need to feel like they are getting the full Shake Shake experience however they want it, whether that’s in-store or online and nailing that omnichannel strategy is Steph’s holy grail. Hear how she’s nailing it right here! Enjoy.   

Main Takeaways:

Digital Scaling Is Not Your Problem: When a company starts to see an increase in digital traffic and sales, the immediate thought is how will the backend systems hold up? What you should also be paying attention to is how will your logistics and operations adapt? Supporting a retail location is different than supporting a delivery-based business, and all facets of the company need to be ready to meet the new demands, not just the digital team.When Two Worlds Collide: Brands are trying to figure out the best ways to bring in-store and personal experiences together with the digital journey. When your brand identity is around being a gathering place for people to come to, it is a challenge to shift that messaging and that experience to a digital platform. By creating digital options and building physical spaces that work in conjunction with the online platform, the two worlds can become complementary.Long-Term Option or Short-Term Trend: Things like pop-up shops and ghost kitchens might seem like all the rage and offer a quick, simple way to scale, but the question remains whether they will stick around long-term. Quality is often the reason first-time customers become repeat customers, so if brands aren’t investing in creating the highest-quality experience and product, they likely won’t be able to stay successful long-term.

For an in-depth look at this episode, check out the full transcript below. Quotes have been edited for clarity and length.

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Transcript:

Stephanie Postles:

Hey there and welcome back to Up Next in Commerce. This is your host Stephanie Postles, CEO at Mission.org. Today we have Steph So joining the show, the VP of Digital Experience at Shake Shack. Steph, welcome.

Steph:

Thank you. Thanks for having me.

Stephanie Postles:

Yeah, I'm really excited. I mean, when I saw you guys coming on the show, well I first got hungry and then I started looking for locations of how close are they in Austin? Can I find a location to go try out before we have this?

Steph:

We have that effect on people. We love that.

Stephanie Postles:

I know, it's good. So your career has span across so many industries; fashion, beauty, health. It seems like you've done it all and I was hoping we could start there and hear about your journey in all these industries?

Steph:

Yeah. It's been a long and winding road. I always like to tell the story that it actually all began with restaurants. So, my very first job was waitressing at a small sushi place in the Bay Area in California where I grew up. Really what brought me to New York was also food. I really wanted to explore all that the city had to offer. I had lived on the West Coast my whole life. My first summer after college, my freshman year of college, I decided to just come to New York, see what it would be like. I've always believed that working in restaurants opens doors for you that you might never expect.

Steph:

So, my very first summer in New York City I worked for a fine dining chef for the summer, as a waitress in her restaurant as a server. Learned everything that she could teach me in three months about wine, fine dining and food and really fell in love with hospitality as an industry. But, back to the long and winding road, I touched a lot of different industries before making my way back here. And I often tell folks, just follow your interest in passion and you will never know where it will bring you. I'm excited that it brought me back here.

Stephanie Postles:

That's awesome. I, a fellow waitress here. I was a bartender, waitress and at one point when I was 14, I rolled silverware for eight hours a day. I'm sure you know about that life.

Steph:

Yes, all that side work is what builds a lot of character. And similarly when I went back to the Bay Area after being in New York, I felt like I had to have every job. So I tried bartending. I tried hostessing. I had every seat in the restaurant, probably except for a chef, which is probably for the betterment of everybody else. But, yeah it was such a great experience and the hum of that excitement has never really left me.

Stephanie Postles:

Yeah, do you still have the server dreams?

Steph:

Of course.

Stephanie Postles:

Okay, you exactly know what I'm talking about.

Steph:

When somebody has something wrong with their plate or something is wrong with their dish and you have a panic attack because you really want to fix it. Yes, for sure.

Stephanie Postles:

Yeah, you're like, "Ugh, forgot the ketchup for table 25. Oh, that was two days ago."

Steph:

Those dreams are now augmented with the digital dream, which is like, "Oh, my God something on the website has crashed and I can't figure out what it is. So, there are different nightmares with each field.

Stephanie Postles:

Yeah, they all come in different stages of your life.

Steph:

Yes.

Stephanie Postles:

That's great. So the one thing I also read, which I loved, was I think someone was asking how are you attracted to these industries? How do you go from here to here? You're like, "It's not about the industry. You should just be focusing on the customer." I would love to hear how you think about that when you were moving around in so many different areas?

Steph:

Yeah, I truly believe that digital and the customer have equalized so many things about the way we all, as consumers, want to experience brands. So, now we all have a phone. And we all have this digital life that we're leading in parallel to our physical lives and maybe in the last year we've brought these even closer together, our digital lives and our physical lives. I think that digital does a lot to bring brands to life in a way that even physical retail in many ways was difficult to bring things to life. And I've always been really focused on that, because I think the consumer experience is so interesting. The consumer I was finding, as I hopped between beauty and fertility and fashion, all of these things that consumer was the same.

Steph:

What they were looking for was the same. They wanted a brand that they could identify with, that spoke to their core values, that really made them feel safe but also understood. And all of that can be communicated in a digital way, I think with great consistency. It is a little bit more challenging as you scale people operations and retail operations to bring that to life in a physical way. The interesting thing about Shake Shack is actually I think we built this physical infrastructure, this physical brand that is a community gathering place, that has hospitality at its core. So we almost had that going first and then that's what's exciting to me is bringing that same consumer into that experience and then also bringing digital into that experience and translating that out. Yeah, I still do believe the consumer is at the center. They're experiencing all these brands in a really digital way. And the brands that are successful are the ones that can connect and translate their brand in that way.

Stephanie Postles:

Yep, yeah. I love that. A couple years ago, I forget which book I was reading, but it was essentially saying if you're looking for creative ideas in your business today, go to a completely random industry. Go to the airline industry. Go to hospitality. Go to restaurant business and you will find something that can be relatable to your company today and open up Pandora's box of, "Oh, that's how they're doing it here." I can see maybe how you came from working at in these different e-commerce roles and you were at Ralph Lauren and you were at a fertility clinic and doing things there and being like, "Of course the restaurant business should also be implementing this app, or this way of communication," that maybe they weren't thinking about before.

Steph:

Yeah, 100% true. I think from skin care and beauty, to fertility was just such an obvious link because we were targeting this consumer that maybe she's in her mid-30s, thinking through various things in life and thinking about her goals and focusing on herself. I think that was such an easy link. Then as I looked at fertility and fashion and food, into hospitality, my view was where are people really spending their money these days? And so much of the way the consumer is thinking right now is spending on experiences. It's so much less about stuff. And I think it's been very interesting to see that evolution of the consumer mindset. Initially, when I was at Ralph Lauren and Shopbop and a lot of these really fashion and apparel focused brands, there was almost a cycle at which consumers were looking to replace their clothing and try on a new look when it comes to the season.

Steph:

I think that the consumer has really shifted and of course COVID has really pushed this even further. None of us actually care what we're wearing anymore, or it actually doesn't really matter. But I bet all of us would give anything in many cases last year, just to have a meal with a friend and gather somewhere just to hang out, have a burger and share a meal. And so, it really attracted me to hospitality to bring those experiences back to life. And I felt like so much of the way the consumer is starting to think about their day to day is really giving themselves those experiences is almost little treats and little uplifting moments in their day. So, it was really a draw to come to a brand like Shake Shack.

Stephanie Postles:

Yep. Yeah, I love that. So tell me how long have you been at Shake Shack now? When did you join?

Steph:

Yeah, I joined in December of 2019. It's such an interesting time because I joined and digital sales are coming through our digital channels here at Shake Shack, accounted for about 20% of our business. And I thought, "Wow, this is such an exciting opportunity to grow that 20% to maybe 25, or 30." And had started to set those goals. It was fascinating to see four months later in the throws of COVID, to just see that percentage fall on its head. We were very quickly 80% digital, which was a crazy ride to be on.

Stephanie Postles:

Yeah, that's wild. So what did that look like? I mean, what did those couple months look like? I think I read a couple articles where it went up to 80, then maybe it leveled back down to 60, which is still crazy to think about where you were. What things were you guys doing to even keep up with that digital demand?

Steph:

It was so interesting because the great thing about digital is that it can scale. So our app, our web platform, we're very lucky that from the IT side we were able to handle this massive influx of traffic. We did add additional security measures in place. We wanted to be very careful with the amount of data that was coming through that we could protect consumer data. That's always been a very important goal of ours. But interestingly digital could scale. What was more challenging to scale was the operations that come with that. So, our restaurants were not used to dealing with every single order having to be packaged in delivery type packaging. A closed clam shell for a burger, a sealed bag. So it was almost more challenging for our operators to shift to a digital mindset and that's been a really interesting journey to be on with them.

Steph:

Many of them have had to pivot and figure out how to provide our famous Shake Shack hospitality from behind a mask and when your interaction with a guest is so limited to just the, "Here's your order," and handing it out the window or handing it to a car window. It's been really inspiring for me actually to see how the operators have all taken this new business model and really made it their own. So that I think was actually the bigger adjustment for us instead of the digital platforms. I think we made improvements and we made tweaks to our experience, but it was certainly harder from the ops perspective to make that all come fluidly together.

Stephanie Postles:

Yeah. How did you retain those new customers? I think I read a number was like 1.8 million new customers, and you can tell me if I completely botched that number. It was above a million though.

Steph:

That's correct.

Stephanie Postles:

Oh, it's correct? Nailed it, yes. Okay, so you got all these new customers coming in, trying something for the first time potentially. How did you keep them coming back and keep them engaged so they stuck with the brand?

Steph:

Yeah, I think it was really initially last year about meeting the guest where they were. Of course we can get that first visit out of a guest who's really excited to try a Shack burger for the first time. Maybe our digital platforms make it a little bit easier for them to have a contact free order with us. So we feel that that first visit we got you and we can get you with the food and that experience. I think after that, it's really the guest experience that will keep people coming back. There are a few things that we've done in the last year that I think have really met the guest where they were. We've offered limited time offerings. So we've brought back, last fall we had a huge hit with our hot chicken sandwich, playing a little bit into those chicken wars. Recently we've been doing avocado as the most requested ingredient that we've been asked for many, many years. So we've added an avocado bacon burger and an avocado bacon chicken sandwich to the menu. So those things I think keep people coming back.

Steph:

I think we're a real believer in the thing that will make Shake Shack most successful is this feeling of it being a community gathering place. I actually think about that a lot within digital. That even if you're placing your order and having 80% of your experience in the digital channel, I still want that feeling of the brand as a gathering place, as an uplifting experience to come through that channel. Because ultimately, then you'll go to a Shack and you'll pick up your order. We want that interaction to be just the cherry on top of what's already been a positive experience. And that to us is how we're thinking about retention, that it has to be that seamless, and I hate to use this overly used word, but it has to be a seamless omnichannel experience from digital into the restaurant. And then post purchase as well. We love to get guests feedback and hear how things went and make it right if something went wrong.

Stephanie Postles:

Yeah, so how are you thinking about crafting those experiences now, where I feel like there's half the people are ready to go, ready to get out there, get back into the world. The other half maybe still a bit timid. What things are you guys crafting to be able to start bringing people together and creating memories, and doing everything you just talked about?

Steph:

Yeah. I think over the course of the last year, Shack Track was a huge initiative for us, which was about infusing our digital experience with lots of choices. So we wanted the guests to get their Shake Shack the way they wanted, whether it was via pickup, via curbside. In some cases we launched drive up and walk up windows so you don't even have to enter the Shack, but we'll have your order ready and you can get your order from the exterior of our Shack. Then we launched delivery within our app as well. So that was really to say, "Hey, however you want to experience Shake Shack, we want to make sure you can do it all from this digital platform." So Shack Track as an initiative was really about giving maximum flexibility to our guests, exactly as you said to get as out there as they want to, or stay as safe and on their own as they'd like to.

Steph:

What we've noticed is actually those channels are really providing more predictability for the guests around their experience. So they can basically say, "I just want to be able to know that I can pick up the order around this time." And many of them come in and are invited by this atmosphere and are starting to open up again and feeling like, "Hey, maybe I'll just sit here and enjoy the experience of sitting in a restaurant." We're seeing that more and more and I think that's going to be the trend over the next year as people start to come on back.

Stephanie Postles:

Yep. I wonder, it feels like a lot of not just restaurants, but stores in general are flipping inside out. Where it's like you don't really need as much as what's inside anymore. Why not have most things outside and pick it up and order it from the outside and then sit at a table, or just enjoy the outdoors. Which when I came to Austin actually, that was something that felt really big here, where I hadn't really seen much of that on the East Coast or even in the Bay Area. It wasn't as big of a thing as like here, everything's outdoors. All the restaurants are outdoors and it seems like that model might be accelerating, not just even with restaurants, but I mean thinking about some of the big home improvement stores. Why do I need to go in there if I can just order and just pick up on the curb? Why do I need to go through every aisle to find the specific nail. Obviously I am not a DIYer. Whatever I'm looking for, I don't want to browse around for it. Go help me find it and then bring it to me.

Steph:

I think that's right and I think our restaurants have always been very design led. We always like that feeling of an outside and our first restaurant in Madison Square Park is literally in a park. So, this year has been really interesting as our real estate and design teams have started looking at new locations of Shake Shacks because we are looking for very different things now. We're looking for that outdoor patio. We're thinking about things like heating outdoor patios where it make sense to do so. We're also thinking about things like accessibility for cars. So drive-through is something we've talked about is coming for us and that is a totally new format for us. We've never really looked at sites that were drive-through specific, but now we are. And trying to make that uniquely us. I think a lot of drive-throughs are almost very transactional and your very last ditch effort, got to get something to eat and I'm going to stay in my car.

Steph:

We would really like to again, bring our unique experience to that. But certainly, I think it's changed how we look at real estate and how we look at how we want to serve the guest and where the experience happens. I think it's exciting, especially now I live in New York City and see how the city has totally pivoted to keeping some of this outdoor dining. Sometimes it feels like a little bit like Spain, when you're on certain streets and you see all these elevated platforms and restaurants outside.

Stephanie Postles:

Yeah, I know.

Steph:

So I think there are elements of this last year that'll be great if they stay.

Stephanie Postles:

Yeah, I love that. When I was in Palo Alto they closed down University Avenue which was a big thing that cars would always drive through and they put all these restaurants out on University Avenue and everyone was like, "They should just keep it like this. Why do cars actually need to drive right down the center of here? They can go around." Yeah, I think a lot of businesses are starting to rethink that model of why do we need to confine people and use the rest for parked cars that aren't doing anything, which is an interesting world to be in now.

Steph:

Yeah, 100%. I worked at about three of those restaurants along University Avenue.

Stephanie Postles:

Oh, did you?

Steph:

So, I absolutely love that example because it used to be so different and I think we all used to be of course post-pandemic world will be very different. But I think we all used to be focused on what's going on inside and now I think everyone's like, "Just let me be outside." I think that hopefully will not shift back too quickly. I think people will still have that attitude for the near term.

Stephanie Postles:

Yeah, it does seem like there's, especially in fast food, seems like there has to be two drive-throughs. You've got the one for people who are like, "I want the experience, I want the full shindig. I want to be able to talk to the people who are providing the food." Then there's other people that are like, "Just need to get in and out. I know the food's great, we'll talk another time." It seems like there could be a cool split test to have a guide shop style store of which lane is utilized more.

Steph:

Yeah, this is something we've looked at.

Stephanie Postles:

Oh, really?

Steph:

So we just launched ... yeah exactly. We've looked at drive up windows. So drive up windows are basically you've pre-ordered. Your order is waiting, but you still don't want to get out of you car. Different from curbside in that you actually drive up to a window, but there's no ordering at that point. There's actually just a handoff to you. So we have two of these now operating in the Midwest and it's a hugely popular option for those two places. They love it. So one's in Fishers, Indiana. We're actually seeing a huge percentage of our digital orders choosing that experience of not having to get out of the car, having pre-ordered. We have this hypothesis around drive-through as a very different use case. It's a spontaneous moment. It's you're driving down the highway. I know this well, I have three children and there's this moment where everybody is cranky and hungry. Drive-through is almost a not a premeditated moment. It's a, "I need to get a meal right now."

Steph:

And so you do need to order on premise, and again from my own personal experience as a parent, there are those moments where you just are not ready to take three kids out of car seats. You just want to stay on track to wherever you're doing. So we really view it as two distinct use cases to your point, and we're certainly not opposed to this idea that maybe those experiences could live in parallel, or as we're learning we think there are some markets that will be primed for the drive-through option and some that'll be prime for a drive up option where it's like, I've already pre-ordered. So, we're excited. We think that's going to be a big part of how our business begins to shift as we continue to expand.

Stephanie Postles:

Yeah. But I think that als just shows the nature of how quick you all were able to shift, two new consumer expectations and keeping a pulse on what do people want? Okay, let's quickly, let's try it out. Then depending on the market like you said, some people might want different things. I mean, I have three kids and my three year old, when his blood sugar drops, I'm like, whatever there is. Gas station food, I don't care. Eat this kid. It doesn't matter.

Steph:

It's so true and I think, it's interesting as we go through this because living in New York City a lot of us on our team were trying to figure that out in terms of, "Hey we live in New York City. How should we launch a drive-through? There are no drive-throughs really in New York City." So we were all having these really funny meetings where we were really trying to digital into it. There are certainly folks on our development team who have not done a drive-through in many, many years. So that was a fun personal experience where I could say, "Listen, this is a huge part of my life. I hit a lot of drive-throughs just as a parent. It's a key part of our restaurant mix and choice. So it's been very fun to bring that experience to a lot of our projects, because there are definite use cases that speak to a certain consumer segment I happen to fit.

Stephanie Postles:

Yep, you represent me well too then. You can speak for me wherever you go. It sounds like we're very similar. So, how do you go about keeping your customers engaged, even when Shake Shack is not on their mind maybe. They're not even hungry. Are there ways that you try and pull them into this community? And maybe so when they are driving by you're like, "Hi, hello, we're over here in case you miss us." How do you think about that engagement?

Steph:

Yeah, that was a really interesting piece of taking this role for me. When I joined Shake Shack I think I asked our CMO at the time, "What do we spend on digital marketing?" And the number he gave me I laughed out loud. I was like, "Wow, I really think there's massive upside on that number. That's a number that I spend monthly for marketing a fertility clinic in New York City." He and I had a really good laugh about it and we said there's such great growth out there. I think digital marketing and I know a lot has been said about ads on Facebook and ads within our social media platforms, whether or not they're relevant and whether or not they're tracking, et cetera.

Steph:

But, we have seen tremendous growth of our digital guests coming through those channels and I think it is about the right creative, the right message and the right audience. So we've been very focused on increasing our relevance to that audience, keeping Shake Shack top of mind. It's been a great channel for us to share new features we have, like curbside or drive up window, or delivery now available in the Shack app. Those are things we can put out on paid ads that I think it's harder to reach people and it has been harder to reach people over the last year. So our digital guest acquisition has been really an exciting channel to double, triple down on.

Steph:

I think it keeps us top of mind and honestly what's been most successful for us is when we are going to open a new restaurant, we try to go out there with digital ads, before the opening, so that folks get excited. So that folks know they can download the app and be ready for opening day when we're usually crushed with people. And recently we've opened a few new restaurants where it's been exciting to see how many people have downloaded the app before us, even opening instead of standing in a long, snaking line on the first day. They're actually placing a digital order on their first day and having a more expedient experience on that. So that's been really fun and I think it's about, to your point, staying top of mind, preparing for your visit and getting excited for your visit. So it's a little bit more than just the need to eat something and driving by and less of a functional visit.

Stephanie Postles:

Yep, yeah. That's great. Are you giving coupons or other things to incentivize people to download the app and get them in there?

Steph:

It's interesting. We've tested many things and we have not had to incentivize with discounts. And that is actually a really core tenant of ours I think as we go through this. A lot of the premium brands that I've worked with have gone by the wayside, by over discounting. And I think it's no secret that in retail that that has been a really big challenge. Certainly with our challenge at Ralph Lauren in that the guests, the customer was only buying apparel on a semi-regular basis. And so almost waiting for the sale. So I think hospitality is going to continue to take some cues from what's happened in retail and be hyper focused on now being overly discount driven. So we've been really careful about how we divvy that out.

Steph:

We also look at our QSR competitors and think about value menus and dollar menus and what that means. Shake Shack's ingredients are very well known for using premium ingredients. We think there's value in providing these premium ingredients at accessible price points. So our view is to keep that as pure as we can. Not to say I think what we have found is the lifetime value of digital guests is so high, that somewhere in that journey we do need to keep incentivizing for frequency. So, we do a welcome offer that's somewhere in that first stream, but it's not how we acquire the first guest, the first touchpoint.

Stephanie Postles:

Yep. How are you viewing food marketplaces, like Uber Eats and Grubhub? Do you guys play with them? How do you think about that relationship, while also still representing your brand in a very different way compared to a lot of other fast food type of places?

Steph:

Yeah. I always talk about the marketplaces. We have great relationships with them. We are available on all of them. So we work with Uber Eats, DoorDash and Grubhub. I view them as a microphone for the brand. If you're hungry and you're going to order delivery, chances are you'll be going to one of those apps. Now if you're looking for Shake Shack, I would always hope that you come to ours. So, we have to be in mix with our third party partners and we do a lot of fun activations with them because, honestly it's great to split the check on talent if we do something with a partner. So for example, we did a really fun partnership with DoorDash and Boyz II Men over Valentine's Day. And we just thought that was so nostalgic and very brand right for us, brand right for DoorDash. What's more fun than a Valentine's day berries to men shake delivered by door dash. So it was a great experience in terms of getting to partner with talent, getting to split that check with DoorDash and we reached a ton of people through the DoorDash platform and we were happy to do so.

Steph:

I think those are examples of how we like to use our third party partnerships to do uniquely Shake Shack things, but with a really big platform. And then, on our own delivery we really are focused on making sure that that experience is great and if you want Shake Shack, we want to make sure that guests can choose the mode, whatever is most convenient for them. So they play a complimentary role.

Stephanie Postles:

Got it. Yeah, love the Boyz II Men thing. I wish I had seen that because that's an all time favorite right there. No one can say they don't like Boyz II Men. I mean, I don't think they can.

Steph:

We completely agree and it was such a fun partnership to work with them on Valentine's Day. We were not totally surprised, but it was just amazing to see the fan base turn out for Valentine's Day. So that was a really fun one and it inspired us to think about these cultural moments where talent, culture, brands, Shake Shack can all come together. So that's really how we've been thinking about a lot of the things we do is how can we bring that experience to the guest? That's been a huge part of this past year is we got to come to you because it's a challenging year. You may not be going many places.

Stephanie Postles:

Yep.

Steph:

That was a really fun one.

Stephanie Postles:

That's amazing. So what does it look like forming that partnership? Like you said working with talent, working with a food marketplace, bringing it all together. What does that process look like behind the scenes?

Steph:

Yeah, we worked super closely with them. We have a dedicated team that works with our third parties and I think the biggest thing about that is we want to be always focused on the thing that another restaurant couldn't do. I think there are a lot of cool celebrities and talent out there who work with a lot of different brands and I think we just are always trying to strike that balance of Shake Shack is known for a modern take on classic food. So Boyz II Men really fits that. It's the throwback to something nostalgic. So we love to have that line straddled between something that's nostalgic and something that's cool and culturally in the know. Shake Shack is like this culty brand in many ways. So, anything we can do to wink and nod at that little cultural zeitgeist I think is what we brief our agencies, what we brief our partners as these would be great partnerships.

Steph:

The other example I love to give is we most recently for 4-20 partnered with Action Bronson and Postmates. Action is so amazing as an influencer. He's hilarious. We think he's just perfect for 4-20 as the day. He celebrates and observes and it was funny because he was releasing his memoir on 4-20 and we thought this is so perfect.

Stephanie Postles:

Oh, great.

Steph:

So we partnered with Action and we basically said, "What would be the most ideal menu item for you on this day?" And he put together this double bacon Action Bronson Shack Burger which we thought was amazing and looked incredible. It's an item that we actually get asked for a lot. So we put it on the menu for 4-20, for this partnership with Action. He made a video which is him sharing how a Double Smokeshack makes him feel, which was hilarious. It's that. I think it's we know it when we've hit and the thing I love about our brand is that we can flex those, a very wide range of interest across culture. And so from one month Boyz II Men to the next month doing Action Bronson was just like a really fun testament to how far we can stretch our brand and our values. So it was great.

Stephanie Postles:

Yeah, I love it. That's so fun. How do you think about, I mean you joined during an interesting time. All of a sudden it starts accelerating really quickly. You're trying to figure out whoa, whoa what's happening in this whole new world and you were betting on digital being a certain percent. It skyrockets. How do you stay on top of innovating during a period like that? Because I'm sure you came in with a ton of ideas like, I'm going to do this, this. My first 90 days might look like this. Maybe some ideas that you thought were moonshots. And then all of a sudden you're maybe having to scramble a bit. How do you get back to that innovator mindset, if at all right now?

Steph:

Yeah, no I think that the last year, when I first joined we had a great roadmap that I was so excited about. The roadmap was like we need to innovate on our platforms. We need to focus on bringing actually a lot of our platforms up to par. So Android and web were my first focuses because those were our aging platforms and platforms we wanted to bring in house. So, we really focused on those two and that was going to be our big story for 2020. When COVID hit, every single innovation that we wanted to make, it was faster for us to deliver it through our iOS app. So we made a ton of new improvements and additions in iOS, leaving a lot of android users annoyed at us because a lot of the new features we were adding weren't available for android. So I think that innovator mindset, I think the rest of this year we're going to be finishing out almost that first year roadmap.

Steph:

It's crazy to think about it, but finishing out that first year roadmap and bringing all of our featured parody across our platforms. We have to get to that and I think that's that first stage. But, the cool thing about the last year is we've been forced to move so quickly. We actually moved our company towards that agile development cycle. So now I think we have a much more prone, agile methodology for how we launch new technology and that's really exciting for any digital development or product person. Because in my mind that leads us down the path of, "Hey, we can pilot stuff. We can be more agile. We can be faster. We can do one platform at a time." So I think that gives us a lot of room in the future to perhaps add whatever it might be on a small scale before we take it to all three platforms and go big. I think actually this last year forced us into a much faster cycle and development cycle, which is great, because I think for any technology that's basically where you got to get to.

Stephanie Postles:

Yeah. I mean, it sometimes still feels crazy to me that we have to build for different platforms. I totally get it. I mean I built apps back in the day. But I remember getting the [inaudible] app done and being like, "Ugh, I have to essentially rebuild it so it fits with android devices and all the other ones out there, and different sizes. I don't know why this feels vile to me that we still do this, but it feels archaic. When will there be a place where it's like you build once and it scales?

Steph:

Yeah, we think about this a lot too because we're like, "This is actually the front door for so many guests," and that's been a new mindset for us too, because I think there was a time where people felt that, "Well you're going to discover Shake Shack through the neighborhood. You're going to walk around and walk through that door. But the digital front door is so much bigger. And so you've got all these platforms and interestingly they're three separate doors. There are reasons for each of them, which is super frustrating from a developer's perspective because it is like doing it three times. But yes, in the moments that we feel like we have to motivate our team, we definitely go back to this digital front door being so much wider and if were able to cast the widest possible net, that we're going to really capture the guests, no matter how they choose to interact with us.

Stephanie Postles:

Yeah, yeah. And even thinking about adding on then an international layer to devices. I mean, that was something I know we struggle with back at Google of people were not even able to update their device because of data issues. I feel like things like that are taken for granted in the U.S. Of course all my apps just update in the background and I never even have to think about it really anymore. But I mean, in other areas that's a huge thing of, "Oh, well how much data will this take in storage?" And that's a whole other big thing, especially with all these new users coming online. Is this something that you guys are thinking about too?

Steph:

Well it's a fascinating thing because we licensed Shacks very early at Shake Shack. So, we have a big international presence and we work with a lot of licensed partners who help us develop our digital platforms through those partners. I think one day the holy grail for me will be that you can use the Shack app everywhere, in airports, in stadiums, in Japan. I think that would be incredible. For now, we're not there. We rely on our partners to build these digital tools on their own platforms and whatever is relevant for their market, et cetera. We work really closely with our licensing team though and I think that's been a really fun part of his past year as well, is being able to share with our license partners, hey this is our digital roadmap and what we're building on our side and on our own properties and platforms. In some ways they've tried to mimic that, which is great.

Steph:

You start to see them adding delivery. You start to see them thinking about different pick up options in their restaurants, et cetera. So, I think that's been real inspiration, but I think that ultimately if I could look 10 years out, I certainly want to be the app that works omnichannel and omnipartner which would be a huge challenge to get to, but would be awesome one day.

Stephanie Postles:

Yeah, yeah. Are there any trends that you're seeing right now? It can be here or abroad, that are actually surprising to you where you're like, "Oh, that's picking up, or people want it that way." Anything there that's surprising, because I feel like this whole past year too is full of surprises.

Steph:

Yeah. Ghost kitchens continue to surprise me.

Stephanie Postles:

What is it?

Steph:

Yeah, not because I don't see the value. We're actually looking into them and some of our license partners use ghost kitchens to to-

Stephanie Postles:

Oh, kitchens. I've never heard of those.

Steph:

... service the different areas. Yeah, so ghost kitchen is basically it could be a food truck. It could be a kitchen or a commercial kitchen. It is not a branded restaurant, there's no seating. But, in London ghost kitchens, for example, are serving Shake Shack to a delivery audience, for example. So, our food is cooked up to our standard and with our ingredients, et cetera, in an unbranded storefront and delivery partners pick it up and it's delivered the guest and the guest never really knows that it didn't come from a Shake Shack restaurant. So that's the ghost kitchen concept. We're certainly looking at it domestically where we might have tons of demand and not able to fulfill it through our restaurants. But the reason I think this concept just totally baffles me is, there are brands now trying to use ghost kitchens as a way to get to 250 restaurants overnight. I think it's such an interesting thing because the question of scale versus brand is one that I think that not everyone's getting right.

Steph:

So, some of these folks don't really have a brand. They might have an influencer following, or they might have an idea, or they might be a really small restaurant concept. And they're able to get to massive scale, like 250 restaurants nationwide by using ghost kitchens. I think it's really interesting. I still can't figure out this trend, so that was why it was my answer to your question, because I'm looking at it and saying, "How far can this concept push?" It's great from a real estate, not having to build out space, not having to train anybody.

Steph:

But, how far will the consumer go in buying into that, without the experience, without the physical place that you can go? It's almost like when Amazon told us we don't ever have to go in a store. We're just going to deliver things to you. Brick and mortar retailers were like poo-pooing it a little bit because they're like, "Well, no everybody will want to come to a store." I think there's a happy medium there. So food will go through that too and I think it'll be an interesting evolution of how many concepts can get to scale through ghost kitchens and how many of those will survive?"

Stephanie Postles:

Yeah, I mean I also wonder how many people are going to get ghosted with that whole idea. I mean I think about all these new companies right now, especially in the e-commerce world popping up really quick, over promising, unable to deliver, and then they're gone. I mean that's just because it's obviously a lot of people are going online right now. It's very easy to do. It's very easy to sell. It's easy to maybe drop ship and white label things. But, I think that of when will there be a point of distrust because someone gets burned like, "Wait this isn't what I thought it was. This isn't the quality."

Steph:

I think there will be a flight to quality. I think ultimately a lot of those concepts are fun. They can pop up. You might try it once, but as we were talking about at the beginning, how do you get people to come back? People come back for the experience. People come back for food that's really high quality and they can really feel the value of that. I think it's such an interesting thing for me to watch because I think complimented with the right brand and actually done correctly, that could be an incredible way to scale. But it is very much like what happened in e-commerce and what is happening in e-commerce where it's like, "You start to wonder where is the quality control on this and also how often is a guest going to truly buy into that?"

Stephanie Postles:

Yeah, yeah. I wonder if there's an opportunity for restaurants to merge, turn into fusion restaurants where it's like now we are a Dunkin Donuts and Shake Shack and if you order from this ghost truck, you can have ingredients from both. Because I do find myself, especially on Grubhub where I'm like, "Oh, I kind of want a little Indian food, but then I also want Thai food and this." That maybe partnerships mentality maybe could work. Because then you're actually giving something more, versus the alternative is, "Well, I could just order directly from Shake Shack."

Steph:

Totally and I think one of the ways we've had a lot of fun experimenting with this is we did just recently do this now serve and collab series. So we bring in a chef. In Atlanta we brought in Pinky Cole from Slutty Vegan. Here in New York we worked with J.P. from Attaboy. It was super fun to bring in really unusual ingredients and put them in a Shake Shack concept. We loved this for testing and getting a sense for, "Hey, is it our guests who's really loving this new ingredient or this type of food in burger form, or is it that we're bringing in new guests and someone who's coming as a huge fan of that chef?"

Steph:

So what was interesting about all that is in Atlanta we certainly drew massive fans of Pinky Cole and her vegan concept. That certainly has gotten us thinking here in New York when we partnered with J.P. and with Attaboy, we saw a lot of Asian guests coming out. I think it had to do with our philanthropic partnership as well. But, it's just a lot of really interesting stuff for us to think about. Is there a way to continue to expand our menu properly to serve that guest?

Stephanie Postles:

Yeah, yeah. That's always a challenging thing to think about of not going too far where you get distracted and staying true to the roots, but also not being so stuck that you can't innovate and try new things, and fail fast potentially. But at least get in front of new markets.

Steph:

Totally and I think we also love it from a community gathering aspect. I think there's always some excitement when you come to a chef collab and I think we've always wanted to go back to our culinary roots and really share that with our guests too. So, our background being founded out of the Union Square Hospitality Group, that culinary thing will always be part of what we do. And it's been a great fun and innovative test and learn environment for our culinary team, and also for our marketing team to say, "Hey, how can you reach new audiences?"

Stephanie Postles:

Yep, yeah. That's super cool. So where do you want to be in the next three to five years with Shake Shack? What's your North Star? Where you all headed to?

Steph:

Yeah, I mean I think we want to maintain this amazing digital relationship with our guests. If I look five years out, I think Shake Shack is growing quickly from a footprint perspective, from our digital platforms. So in the next five years, I expect to see our brand in twice as many places and I expect in our digital platforms to be able to capture that full experience. What I mean by that is I think I'm looking at a few things like content infused experience and that frictionless experience, and ultimately that really personal experience coming through our digital platforms. There's a lot of, I could easily look out and see a lot of QSR apps that do an amazing job at just that transactional drive to conversion and complete. But I also know there's a different set of apps that I use that literally just bring me joy. I would love Shake Shack to sit in that latter camp. I would love to create uplifting digital experiences. People use our app because it makes them feel something and also feel satisfied and uplifted the way our food experience is.

Steph:

I think that's a tall order. I think it would be different if I were just trying to gear our team to mimic the best in class of what's out there. But that's boring and that's not what we want to do. We're super focused on Shake Shack having really differentiated digital platforms, and delivery digital and infusing it into our omnichannel experience. So you will see more screens in our shacks as we find the right way to provide status and provide order notifications and in some cases menu boards in a digital way. We want to continue to evolve our brand toward that direction so we can be more dynamic and be more personal, and be more relevant.

Stephanie Postles:

Yep, yeah. I love that and then all of that just leads to a better one to one relationship, which I think a lot of brands are going to be struggling with, trying to figure out how to build that up and how to create authentic content that keeps our consumer there in a way that they want to stay there, so they can keep the conversation going and not lose that connection.

Steph:

Yeah, I think that the one to one marketing, I mean that's the grail right? But even just more personalized content. I think we're starting to segment our guests more consistently. Our CRM capabilities have really improved over the last year and will continue to do so now that we have these 1.8 million guests that we have to really better understand. So we're looking at different capabilities too from an automation perspective and when we think about how to keep people engaged, we really want to make sure we're delivering content that's relevant through all of our channels. And it's funny because you know when you hit it. We did just a fun push message, those really awkward days when we were waiting for election results, right after the 2020 presidential election. I think there was one day that we just decided very Shake Shack and very brand playful. We were saying, "You know what people really need right now is comfort, and nothing says comfort like a cheese fry."

Steph:

We had some push notification that we designed out for that evening and it really hit. I think we got dozens of tweets of people just sreenshotting this push message. So I think we really have that luxury with our brand tonality and voice that we are allowed to be comforting and playful, and when you hit it, you hit it. So we've really had a couple of those cases and now we're thinking through how do you systematize that? How do you make that more of the everyday?

Stephanie Postles:

I love that. All right, well let's shift over to the lightning round. The lightning round is brought to you by Salesforce Commerce Cloud. This is where I ask a question and you have a minute or less to answer. Are you ready Steph?

Steph:

I'm ready.

Stephanie Postles:

All right, when you want to get into a creative mode, what do you do?

Steph:

That's such a hard question.

Stephanie Postles:

I know, that's why it's the lightning round.

Steph:

Okay, well this is embarrassing. When I need to get into a creative mood, I take a shower.

Stephanie Postles:

That's great.

Steph:

There's nothing better than a really great shower and also most working parents know that the shower is the only, the last sacred place that you can avoid your children.

Stephanie Postles:

I love that and I 1000% agree with that. If you were to have a podcast, what would it be about and who would your first guest be?

Steph:

I would love to do a podcast about fearless women and their take on society and the world. I'm so lucky that I've been able to befriend a lot of women in this space, hospitality and through all the roles that I've had. My first guest would be Debbie Sue, who is the CEO of OpenTable. She's had an incredible career and happens to be a very good friend of mine.

Stephanie Postles:

Oh, she sounds awesome. I would for sure listen to that. That sounds great. What's one thing that you don't understand today, that you wish you did?

Steph:

I wish I understood a bit more about this intersection between consumer psychology and AI. I think there's a lot of AI being used to develop plans around data, et cetera. I would love to get to that AI that's truly intelligent, that understand consumer psychology. I have an Alexa in my house and I think that she's supposed to understand certain things. I don't think she really gets me yet. Ultimately that's a space that I'm super interested in that almost like human's machine connection and will we get there, to where they can be really anticipatory and understand us?

Stephanie Postles:

Yep, yeah. I feel that all the time. I'm like how could you not understand that? I perfectly said exactly what's in my head and not working for me here. That's a good one. What's on your ideal hamburger?

Steph:

Oh, well that's easy. My ideal hamburger is a Shack Burger, so Shack Sauce, lettuce, tomato, I add sliced onions, sometimes a pickle, it depends. But that's it, on a potato roll.

Stephanie Postles:

That sounds good, an now I'm hungry. All right and the last one, what one thing will have the biggest impact on e-commerce in the next year?

Steph:

I think aside from Amazon, I think the biggest thing that will happen in e-commerce is our ability to deliver those orders. So, one thing we've been seeing for awhile is that last mile is becoming harder and harder to be profitable. There are only a few companies that can still make money and do that last mile. So I love everything I'm seeing on consolidating that last mile. There are companies out there that are really trying to cut down on waste for that last mile and not package everything the way all individually and separately. So, I think e-commerce in the next year and in the future is going to have to really figure out how to do the last mile in a way that is environmentally conscious, consumer friendly, and impactful. And I think that that'll be a big shift that's going to happen.

Stephanie Postles:

Yes, yeah. That's a big one. Awesome. Well, Steph thanks so much for joining this show. Where can people find out more about you and go to a Shake Shack or download the app? How should they find it?

Steph:

Yes. Shakeshack.com, @ShakeShack on Instagram and follow us and you never know what might happen. You might get a free burger.

Stephanie Postles:

Oh, yeah. That's awesome. Yeah, thanks so much. It's been great.

Steph:

Thank you.

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