CHICAGO — Little additions to a menu might bring solid returns without scaring away more frugal customers.
Shake Shack has a new strategy of upselling premium menu add-ons in its current Black Truffle burger and Parmesan Black Truffle Fries, aiming to keep average unit volumes high as increased labor and food costs squeeze margins.
Relying on high-end items, which also include cherry peppers, fried shallots and avocados, lets the chain protect core menu items from aggressive inflation while locking in Shake Shack’s position as an elevated limited-service concept, company officials said.
The goal is for the customer to walk away “feeling like they had a great experience,” Shake Shack CFO Katherine Fogertey said during the Barclays Eat, Sleep, Play investor conference on Dec. 1. “They got exactly what they wanted, just a little bit of a premium touch for us to help offset some of the higher cost pressures here, but it’s not just a blunt force price across the entire system.”
Due to rising beef prices and labor costs, Shake Shack’s third-quarter margins were 15.8%, down from 19.2% a quarter before.
The chain has raised prices more than 3% in recent months.
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