Shake Shack founding CEO Randy Garutti’s last interview before retiring

When Randy Garutti announced his plan to retire as Shake Shack’s CEO last December, ending a nearly 20 year-long run—he’d been considering an exit for nearly five years, waiting for the right moment. That moment has arrived. “It’s time for the company to benefit from the next generation of leaders,” he wrote in a letter to staff last December.



The first generation of leaders includes Garutti and Shake Shack founder and Union Square Hospitality Group (USHG) founder Danny Meyer, who brought a fine-dining background and priorities to what was once a single hot dog stand in Madison Square Park. The cart officially became Shake Shack in 2004. (Other names under consideration included “Dog Run” and “Custard’s First Stand.”) At the time, Garutti was working as director of operations across USHG’s portfolio of fine-dining restaurants, wearing a suit and tie at Gramercy Tavern one day, and cooking burgers for Shake Shack the next. 



It took Shake Shack four years to open its second location, on the Upper West Side in Manhattan. Garutti spearheaded the effort, discovering and securing the space, then just four blocks from his apartment. Sales surpassed the original location as soon as it opened. In January 2015, the company went public with 63 restaurants, and the stock price has more than doubled in the years since. Shake Shack now has more than 500 restaurants and is considered a trailblazer in the “fast fine” space—nicer than a fast food restaurant, but more casual than a traditional full-service restaurant.



Asked about success, Garutti contextualizes every milestone. Shake Shack opened years before the iPhone, he notes. It later came of age during the look-at-me social media generation; posting a photo from the line at Shake Shack was seen as a form of social capital. Garutti realized the concept would go big, he says, when Shake Shack opened in Kuwait in 2011. 



“Hundreds of people lined up and I remember standing there thinking, How does everyone know about this? And why do they care? ”



During its two decades, Shake Shack has weathered the same headwinds as its quick-service peers, navigating a shift toward digital ordering and third-party delivery, confronting the rising costs of key ingredients like beef, and, of course, simply surviving COVID. In 2020, the company returned a $10 million PPP loan intended for small businesses. It was, at the time, an 8,000-person company.



Today, Garutti seems just as excited about the recent opening of a Shake Shack in Malaysia (“one of the most beautiful Shacks we’ve ever built,”) as he is about the chain’s impending debut in Pittsburgh. 



“Pittsburgh is going bonkers,” he says. Residents are thrilled that a Shake Shack is finally coming to town. The hype is strategic; Garutti says the team chooses locations carefully, making sure a new Shake Shack feels like it belongs exactly where it lands. In Malaysia, it’s in a park inside of the largest mall in the country. In Pittsburgh, it’s inside a former produce market, adjacent to a brewery and a block away from the city’s fish markets, Italian grocers, and other specialty stores.



On May 24, Garutti will hand over company leadership to new CEO Rob Lynch, who spent the past five years in the top role at Papa Johns. When Lynch became CEO of the pizza chain, its stock was tanking and it was suffering from serious reputational damage caused by its founder. This time, Lynch walks into a beloved company racking up milestones. Shake Shack opened its 500th location in 2023; this year it’ll open 80 more. 2023 revenue was up 20% year over year. (Garutti will stay on as an advisor through 2024.)



In a recent interview, Garutti looked back on his tenure and role as the founding CEO working to scale the magic of a one-off burger joint in a New York City park while leading “a whole bunch of naive young people who are kicking ass and wanting to figure out what this can be.” 



Shake Shack is a burger restaurant created by a fine-dining company. From the beginning, you offered customers the sort of hospitality that many people usually don’t associate with a burger restaurant. How did you scale that to hundreds of locations? 



It’s become an accepted notion that because you grow, somehow that means you get worse. We’ve always believed it doesn’t have to be that way. For a long time, we fought the idea of being called a chain. Then we decided that the definition of our chain is that every time we add a link, we can make the chain stronger. 



People call me all the time and say, “I’ve got an idea, I’m going to be the next Shake Shack, I have a concept, and I’m gonna build 100 of them.” And my response is exactly the same every single time: Just do one. If you do it really well, maybe you’ll be lucky enough to do a second. But if you start with a “concept,” I’m pretty certain you’re not going to get to 100.



But scale is the expectation now. Maybe it wasn’t 20 years ago, but investors want something that can go big and produce a huge return, no? 



In 2009, as we opened the second Shack, we got an investment of $25 million. At the time, that was a crazy amount of money to support a two-restaurant company and a high valuation. But we had believers and friends and family and a significant investor who believed. We never took another penny until the IPO [in 2015]. We weren’t building to go public, we weren’t building to “exit,” or to give a return to a private equity firm. We were building restaurants. That allowed us to scale in a slow, organic, real way.



That’s not a popular sentiment. 



But it matters, and it’s hard as hell as a public company to do that every day.



The business has also changed a lot as it’s grown. You opened a cashless kiosk-only store on Astor Place in New York in 2017 as an experiment before kiosk-ordering was in vogue. At the time, it felt antithetical to Shake Shack’s human-centric hospitality. Now, kiosks work so well for Shake Shack that you hastened a rollout last year, adding them to every location. Customers have the option to order from a touchscreen or from a person. What did you learn?



It’s hard to explain what that was like [then] because we’re in a different universe now, where about 75% of our sales happen without a cashier today, whether it’s [via] a kiosk in the Shack, preorder, or delivery app. 



When we launched the kiosks, we also started bringing food to your table. You [would] order at a kiosk, sit down, and a human being brings food to you. Before that, we had the buzzers that alerted you when your food was ready—I got that idea from the Cheesecake Factory. And before that, we’d just yell your name and it was like a rugby scrum to pick up your order.



But go back to that time . . . what were we trying to achieve? When we do it right, the definition of hospitality from Danny Meyer is that you feel like I’m on your side. Our journey has been to try to figure out how we can be on our guests’ side and provide hospitality how they want it. There’s a reason there’s still a cashier at every Shack because if you want it, that works. Astor Place was a one-off, like, what if? And then that turned into a foundation when COVID hit because we had to do it. During COVID, all of our sales were happening that way.



We have not solved this. I’m not claiming victory on anything. We have so much work to do to make this great. But the goal has always been to achieve on-your-side hospitality that, at its best, technology can provide.



It was a huge deal when you added delivery in 2019. It felt like Shake Shack was a holdout; so many other restaurants were already embracing delivery.



Delivery has become a challenging topic, but we live in a universe now where we have to figure out how to bring people their food because dining habits have changed. I believe God intended certain types of food to be delivered—pizza and Chinese food. And other types—burgers, fries, and shakes—are harder. I’m happy to say that most people order inside the Shacks. The majority of our sales happen on a kiosk or with a cashier.



How do you deliver a milkshake? Do you prepare them any differently? 



Not really, other than we make sure the packaging is as contained as possible to keep the temperature as it’s supposed to be. Amazingly, we sell a ton of milkshakes on delivery. 



And now you’re opening with drive-throughs at some locations. 



That was a huge part of our journey during COVID, not because of COVID, but it ramped up during that time. Right now, we have about 30 drive-throughs, and that is a huge new thing for us. There’s a lot of places in the country where people would rather not get out of their car. Even so, about half the people at our drive-through locations still come and sit down inside. Our drive-through locations are among the most beautiful interior designs that we have, and that’s on purpose. It’s hospitality.



The drive-through feels like an embrace of a common trend in quick service restaurants, but you’ve avoided others. For example, why did you choose to develop your own veggie burger instead of partnering with a company like Beyond?  



Every time I tasted those products in the early days, it just didn’t feel like Shake Shack. We always said that if we’re going to serve vegetables, let’s serve vegetables . We had many iterations of a veggie burger that you didn’t see, but we had at least three that the world saw at Shake Shack to get to the patty we have today, which is real vegetables. We’ve never gone with a—I don’t know what you call it—fake meat, whatever. And believe me, they wanted us to be the launch partner. When you started to see it at the biggest fast-food chains, it was easy for me to say, “Why would we ever do that?”



In your letter announcing your retirement, one of the things you said is that Shake Shack has been built to last. What will you be looking in on from the outside? 



I want to make sure that . . . well, I shouldn’t say that: It’s not my job to “make sure” anymore. I’m going to be hopeful that we continue to put our people first. So that when you walk in, you still feel that it’s different from a fast-food restaurant, the way people are engaged, smiling and happy to be there. I believe at our best, we truly are a community-gathering place. It’s in the real estate that we choose, the way that we make it feel. I want people to have a place to gather.



When you walk out the door next month, what’s on the greatest hits reel that’s playing in the background? 



It’d be all the people who stand up and say, “This has changed my life. And because of it, I have a family and a house and I paid off my loans.” The happiness and some of the specialness we’ve brought to cities, that’s a greatest hit. I remember opening in Seoul, and the line was no shorter than a mile long. How did we get there? And why do people love [Shake Shack] so much? That’s in the greatest hits. And for me, personally, I’m going to miss my friends. The people that we’ve built this all with, going through the trenches. I could answer this question forever.



Is it possible to impart all of this context during a CEO transition?



I’m spending all my time in this two-month period onboarding our new CEO as much as possible. My job right now is setting him up for success and trying to download decades of information. I took him to Katz’s Deli the other night. We had dinner, just for fun, to have a New York moment. 



Shake Shack is such a New York brand. How important is the city to the restaurant’s story? Would it be the same if it came from anywhere else?



It needed to be from New York. It would never be the same. If we were from Columbus—no diss on Columbus—and 100% of the same things happened, we would never be here. It would never be the same if it wasn’t from Danny’s company, it wouldn’t be the same if I wasn’t involved. There was a magical coming together of the right people with the right backgrounds that did it all together.