Shake Shack, the fast-food restaurant chain famous for its hamburgers and milkshakes, is preparing to go public, seeking to tap stock market demand for popular casual dining companies, according to people familiar with the matter.
After developing a cult following for its ‘Shackburgers’, ‘flat-top’ hot dogs and eponymous shakes, the company is now preparing to serve up its own shares to the public through an initial public offering (IPO), sources said on Friday.
Shake Shack’s majority owner, Union Square Hospitality Group LLC, has interviewed investment banks in recent weeks to appoint underwriters for the IPO, the people said.
Shake Shack, which started out of a hot dog kiosk in New York’s Madison Square Park in 2004, is expected to post earnings of around $20 million next year, one of the people added.
The sources asked not to be identified because the deliberations are private. A Shake Shack spokesman declined to comment, while Union Square Hospitality did not immediately respond to a request for comment.
Shake Shack would be just the latest in a string of casual dining chains to have going public this year. They include El Pollo Loco Holdings Inc (LOCO.O), Zoe’s Kitchen Inc (ZOES.N), and Papa Murphy’s Holdings Inc (FRSH.O).
Shake Shack is present in many U.S. states including New York, New Jersey, Connecticut, Pennsylvania, Florida and Massachusetts. It has also expanded internationally in cities such as London, Istanbul, Moscow and Dubai.
The company does not franchise and says it has no plans to do so in the future. Shake Shack’s chief executive is Randy Garutti, a Cornell University graduate who worked his way up at Union Square Hospitality from general manager at its restaurants to lead Shake Shack.
Union Square Hospitality was founded by restaurateur Danny Meyer in 1985. It also runs other popular New York eateries, including Blue Smoke, Gramercy Tavern and Union Square Cafe.
Private equity firm Leonard Green & Partners LP agreed to acquire a 39.5 percent stake Union Square Hospitality in 2012 for an undisclosed amount.
(Reporting by Olivia Oran and Greg Roumeliotis in New York; Editing by Chris Reese, Nick Zieminski and Marguerita Choy)
Photo courtesy of Shutterstock.