Question: the potential risks of the project to the Shake Shack, including financial implications. (focus on expansion growth mostly)
The followings are financials for Shake Shack:
Total revenue increased 234% to $190.6 million past 4 years
Shack sales increased 63.5% to $183.2 million last year
Net loss was $(8.8) million
Total revenue to be between $237 million and $242 million in 2016.
Primary challenge will be rising labor costs in 2016.
Shake Shack's lofty goal of opening 450 stores runs the risk of over expanding and drastically lowering its profit margin
Locations in new markets are likely to be less profitable and may carry higher operating costs than existing locations
Shake Shack's expansion to new markets runs the risk of competition with similar burger establishments
By expanding to new markets, the company will have to establish brand recognition and compete with rapid-growth companies