Shake Shack is rolling out its first loyalty offerings, betting that it can boost sales by enticing diners to visit more often.
Starting Wednesday, the New York-based chain will offer app users small and large sodas for $1. On June 5, Shake Shack will allow customers ordering online or on the app to unlock discounts by ordering a burger or BBQ sandwich at least twice within a certain time period. The company will unveil a broader loyalty platform later this year.
It’s one of Shake Shack’s initiatives to accelerate sales growth in part by increasing visit frequency, the holy grail for counter-serve restaurants pitching convenience and speed. Loyalty programs have also become a draw for Americans scrutinizing their restaurant spending in the face of rising economic uncertainty and President Donald Trump’s trade war.
“We’ve actually never at Shake Shack proposed to our guests how often we think they should come visit,” Chief Growth Officer Steph So said in an interview. “There’s almost a sense that Shake Shack is a special thing and it’s saved for special occasions.”
So declined to say how often on average customers visit Shake Shack each year, and the range varies widely among chains. McDonald’s guests go about 55 times a year, while Dunkin’s visit about 20 times, according to data gathered by research firm Numerator.
Gamified customer discounts, such as those the chain is rolling out, tend to be effective at piquing diners’ interest, So said. A test earlier this year showed that those who completed them visited more often than they would have otherwise, she added.
The goal of offers such as the $1 sodas is to entice customers to download the app and keep using it, So said. Shake Shack is also hoping that the price point could encourage guests to get both a soda and another drink such as a milkshake or lemonade, which could lead to bigger transactions.
Shake Shack’s revenue and earnings per share missed expectations in the first quarter, with inclement weather across the US and economic uncertainty hurting results. Sales have picked back up in recent weeks, according to credit-card data tracked by Bloomberg Second Measure.
Chief Executive Officer Rob Lynch, who joined about a year ago from Papa John’s International Inc., is focused on building a pipeline of managers as Shake Shack looks to grows its restaurant count from about 333 company-operated locations to 1,500. Other initiatives focus on speeding up service and lowering building costs.
Shake Shack shores rose less than 1% at 10 a.m. Wednesday in New York. The shares have declined 2.7% this year through Tuesday’s close.
