Dive Brief:

• Shake Shack’s kiosks now make up its largest and most profitable ordering channel, CFO Katie Forgerty said Thursday during the chain’s Q1 earnings call.
• Kiosk checks are significantly larger — by “a high teens percentage,” Forgerty said —  than checks in other in-store order channels. This performance was driven by recent enhancements leading to stronger upsells, she said. 
• Kiosks are part of the company’s Strategic Priorities 2024 plan, which includes improving operations and reducing customer wait times, bolstering brand awareness, increasing restaurant-level margins, decreasing build-out costs and improving team member retention.

Dive Insight:

Shake Shack’s digital marketing team developed more effective ways to guide the guest through the kiosk ordering experience by offering upselling options like adding an extra burger patty or bacon, Fogerty said.

The tech creates more opportunities for guests to customize their orders, which is generally more intuitive for consumers when they are ordering from cashiers. Fogerty added that the kiosk ordering now offers a similar experience to online ordering. Shake Shack plans to launch additional wayfinding to improve customers' spatial awareness of the kiosks.

“We want to continue to push the envelope and learn and see what we can do from a digital merchandising standpoint to help our guests better understand what the LTOs or more premium items are [to] continue to drive additions to the cart,” Fogerty said. 

Shake Shack worked to standardize service across its channels and enhanced employee training. The chain has already seen a reduction in wait times: More than half of its restaurants improved ticket times by 15 seconds during the quarter, outgoing CEO Randy Garutti said. In the next few months, the chain will roll out additional tools to improve wait times and the guest experience, in part by looking at order taking and the flow of food through its kitchen. 

“We’ve also shown some early improvements on our guest satisfaction scores both in Shack and in our digital channels,” Garutti said. “We know that there’s still ample opportunity to advance all these metrics, including order accuracy, which we believe will layer up an even better guest perception and long-term frequency opportunity.”

“We’re going to continue to lean on strategies to improve operations and support our profitability while keeping an eye on the value proposition to our guests,” Fogerty said. “We’ve been testing a new labor model that allows us to be much more targeted in our staffing needs across our Shacks, adjusting for format, menu and channel mix, including kiosks, providing great guest experience. The early testing has been encouraging and we expect to roll it out to all of our Shacks by the end of the year.”

While the chain saw same-store sales growth of 1.6% in the quarter, weather impacted sales during January and throughout the quarter. Sales improved each month, with same-store sales up 4.9% in April despite flat traffic. Sales momentum continued into fiscal May as the chain’s profitability and sales initiatives continue to take hold, Garutti said. Garutti added that restaurant-level margins reached 19.5% during Q1.