Shake Shack IPO filing comes amid a hunger for premium burgers

Fri Jan 2, 2015 5:42pm EST
 
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By Anjali Athavaley

NEW YORK (Reuters) - Shake Shack Inc's filing this week for an initial public offering underscores a question for investors and foodies alike: How hungry are U.S. consumers for another burger chain?

    A key part of Shake Shack's growth strategy involves expanding its locations beyond its New York base, and investors and analysts are bullish on its prospects.

They say there is room for more "fast casual" restaurants that offer higher quality burgers, a variety of toppings and in some cases, beer and wine. Shake Shack's burgers are described in its preliminary prospectus as all-natural and hormone- and antibiotic-free.

To be sure, there are skeptics who say the excitement over Shake Shack is overblown.

“Consumers love it and it will be well greeted in the market - and then probably fizzle out,” said Doug Kass, president of Seabreeze Partners Management in Palm Beach, Florida, and a noted short-seller.

“That a company of such a small size can get a valuation is symptomatic of the silliness ... that develops in a period of zero interest rates," he said.

A Shake Shack spokeswoman declined to comment.

Still, several factors appear to be working in Shake Shack's favor. First, 2014 was a solid year for restaurant IPOs, particularly of the fast casual variety.   Continued...

 
Passersby walk in front of the Shake Shack restaurant in the Manhattan borough of New York, December 29, 2014. REUTERS/Keith Bedford