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Is Shake Shack a Franchise? Estimated Shake Shack Franchise Cost (2022)

Written by: Anna Marchesseault
Last Updated: January 24, 2022
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Do you love burgers and want to make it a business venture? Shake Shack is a fast-casual chain that sells burgers, hotdogs, chicken, fries, shakes, frozen custard, and more. The restaurant is based in New York City and is growing rapidly across the country. The fast-casual restaurant is a $12.8 billion industry but with this, there is a high amount of competition. And the fast-food industry ranks 3.4 out of 4, 4 being the highest in competition. There is also a high-risk ranking of 3.3 out of 4, 4 being the most amount of risk.

The fast-casual restaurant industry is growing exponentially where it is predicted to increase from 1.1% in 2016 to 2021 to 3.2% in 2021 to 2026. This is great to see where in the future there will still be a want for this industry.

If Shake Shack seems to be the right business for you, keep reading.

You can’t buy a Shake Shack in 2022

Unfortunately, you cannot buy a Shake Shack as they are focused on growing their corporately owned and managed locations.

History of Shake Shack Franchise

Danny Meyer opened the first-ever Shake Shack which was a hot dog stand in Madison Square Garden in 2001. Danny converted his hot dog stand to a kiosk-style fast food restaurant. It then took off from there and now there are 275 locations around the world.

The CEO of Shake Shack as of April 2012 is Randy Garutti. The CFO of Shake Shack is Katherine Fogerty as of June 14, 2021.

Who owns Shake Shack?

Shake Shack is owned by Leonard Green and Partners which is an equity investment firm.

If Shake Shack were a franchise-Estimated Franchise Costs

Expected Shake Shack franchise costs are similar to Wahlburgers franchise. The Wahlburgers franchise serves burgers, sandwiches, shakes, and beverages. Wahlburgers is considered a leading competitor to Shake Shack which makes these businesses very similar.

If Shake Shack were a franchise-Estimated Franchise Costs

Expected Shake Shack franchise costs are similar to Wahlburgers franchise. The Wahlburgers franchise serves burgers, sandwiches, shakes, and beverages. Wahlburgers is considered a leading competitor to Shake Shack which makes these businesses very similar.

Wahlburgers Franchise Fee

The initial franchise fee would be around $40,000-$45,000. Wahlburgers’ initial investment is $40,000 which would be a similar amount to Shake Shack.

Estimated Initial Franchise Costs

The initial investment of Shake Shack would be around $1.5 million to $2.7 million which is Wahlburgers investment. This is quite costly but there are many costs for these burger franchises such as construction/leasehold improvements, travel/living expenses when training, and furniture and equipment.

The construction/leasehold improvements are always the largest expense for the initial investment. They can cost from $900,000 to $1.8 million. This is because building a restaurant is very expensive which all depends on the size, condition, and location of the restaurant. Shake Shack like Wahlburgers may also require specific fixtures and construction materials which will make it a fixed cost. There is also furniture and equipment which may cost anywhere from $350,000 to $450,000. The furniture and equipment are a one-time fee which usually is determined by the franchise. This can also include some marketing materials such as a sign for the franchise.

shake shack team

Additional Costs

There are also ongoing costs such as royalty, brand fund contributions, and additional training costs. With all franchises, there is a royalty fee which for Shake Shack would cost around 5-6% of gross sales. Wahlburgers is 6% which is quite typical for food franchises. Brand fund contribution is also a percentage which would be around 1% to 2% of gross sales. The brand fund contribution typically goes to the company to advertise nationally for the business as a whole. This is important because it advertises for your business which ultimately leads to your business making more profits than it would have. Wahlburgers brand fund contribution is 1% of their gross sales but it can go up to 4%. Lastly, there are additional training costs that don’t have a specific cost but if you want to train additional employees after the initial training it will cost a significant amount. This is a common cost among franchises and this all depends on how many additional employees you plan to train which can add up quite quickly. These ongoing costs will not leave you so making sure you have enough profits to cover these is crucial for staying afloat.

Shake Shack’s Expansion Plan

Shake Shack is planning on opening 45 to 50 more stores in 2022 in the U.S. This is the largest expansion for Shake Shack yet and 25% of those will have drive-thrus. The drive-thrus will be located in the suburban areas.

Alternatives

Five Guys

Five Guys is a burger franchise that sells burgers, fries, shakes, and more. This franchise was founded in 2017 in Lorton. Five Guys initial franchise fee is $25,000. The initial investment is $306,200 to $641,250 and this is due to the development fee, leasehold improvements, and equipment. In the next three years, there is a 1% growth rate which is a good sign that Five Guys is growing in the future.

Burger King

Burger King is a fast-food franchise that sells burgers, chicken nuggets, fries, soda, etc. Burger King was founded in Miami in 1954. The franchise fee is $50,000. This is quite more expensive than most franchises such as Five Guys. The initial investment is $1.88 million to $3.4 million and this is due to improvement and construction, equipment, and leasehold improvements. These prices are a common factor to these burger franchises where they are the most expensive and take up the majority of the investment. In the next three years, there is a -1% growth rate which means it is declining. Compared to Five Guys, Burger King is more expensive and not growing, unlike Five Guys which makes it a less viable option.

Mcdonalds

McDonald’s is also a fast-food franchise that sells burgers, fries, chicken, shakes, and more. McDonald’s was founded in Chicago in 1955. The franchise fee is $45,000. The initial investment is $465,000 to $2.31 million and this is due to real estate and building, equipment and inventory which are the most expensive items. The growth rate for the next 3 years is 0% which is neither good nor bad, it is just staying at a steady rate. Compared to the other franchises it falls in the middle when it comes to the cost and growth rate. This is a great option for more of an affordable franchise but there won’t be much growth within this franchise.

Conclusion

Shake Shack is not a franchise but it could become one, one day. Keep your eye out for Shake Shack if it ever becomes a franchise in the future and note these prices to start saving now. But don’t be too disappointed if Shake Shack never becomes a franchise; there are still plenty of burger franchises such as Five Guys, Burger King, and Mcdonalds.

Are you thinking about investing in a franchise, or interested in exploring more options? Make sure to check out Vetted Biz’s website for listings of other similar franchises in the Food and Beverage industry

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