Dive Brief:

• Shake Shack's newest New York City Shack will open Dec. 26 and focus on takeout ordering, according to information Shake Shack emailed to Restaurant Dive. The 2,663-square-foot store will be located in Midtown Manhattan and have two separate entrances — one for digital orders made from the Shack App, web and delivery and another entrance for in-store ordering. 
• The interior will have limited seating, but offer an outdoor patio for dine-in guests. The location will also have kiosks for ordering, CEO Randy Garutti said during Barclays Eat, Sleep, Play - It's Not All Discretionary conference in early December. 
• "[We're] trying to combine the hospitality of the experience we’ve always had at Shake Shack with the hospitality of convenience," Garutti said. "I think that is the biggest thing that we’ve done."

Dive Insight:

With the addition of this takeout-friendly location, Shake Shack now has about five different formats, which include food court units, small formats, large formats and full expressions of the brand. It is also keenly focused on growing in alternative locations, opening units within airports, travel centers and stadiums, and has rolled out a food truck as part of its expansion plans. It has a goal of reaching 450 domestic stores, building on its roster of 156 U.S. locations as of Q3 2019. So far during 2019, Shake Shack has opened 32 American stores, launching 11 in third quarter alone, Garutti told investors during a November earnings call. The company has 254 units globally.

"We continue to believe there's a huge opportunity out there, both domestically and ... internationally with so much of a good start we've had," Garutti said. 

The new format also plays into a growing digital customer base. Although a vast majority of the company's sales is in-store, a growing percentage of sales is off-premise, Garutti said during the Barclays conference. 

The company plans to test a few of these 2,000 to 2,500-square-foot stores, and its design was specifically done to try and alleviate some of the problems created by delivery couriers and people picking up their orders, which creates a busy store, he told investors in November. It also doesn't totally abandon dine-in customers since it offers patio seating. Having several ways to order will likely help this format do well for the fast casual chain.

Shake Shack isn't the only chain testing digitally centric stores in New York City, either. Starbucks rolled out a pickup-only store in the fall while Sweetgreen nixed its traditional assembly line with its new store format in the city in favor of digital kiosks and concierges who take orders via iPad. Chopt also opened a pickup- and delivery-only location in the city this year.

This urban market is an ideal place to test these formats, especially since 90% of New Yorkers have ordered a meal for delivery and 93% possess a smartphone, according to a study by 6t-bureau de recherche. The study also found that a third of New Yorkers eat out at restaurants less since they started using meal-delivery apps. With such a large swath of digital consumers and strong brand recognition in the New York, this format will likely stick for Shake Shack and help it continue to diversify and grow sales.