Shake Shack – Please, give us the burger of the future.

Shake Shake, I urge you to write the next great chapter of the hamburger.

I call on you, glorious Shake Shack, with your delicious crispy fries, instagram-able burgers, and divine custard desserts, to lead fast-food into the future. The burger needs a makeover, and we need to get rid of the meat. The UN Food and Agriculture Organization reveals that 14.5% of worldwide greenhouse gas emissions are a result of livestock, and beef and dairy production account for 65% of livestock emissions – that is a total of 9.4%1. Producing just one beef patty releases 4.35kg of CO2 into the environment2. Its carbon footprint, as illustrated in Exhibit 1 below, is 10x that of chicken.

Exhibit 1: Your Food’s Carbon Footprint (CNN, Source 3)

Shake Shack, you are poised to lead change in the industry

Why Shake Shack? At first glance, it may seem like they are ill equipped to lead change in this space; however, their size, brand, and mission suggest otherwise:

  • Shake Shack is relatively nimble. They are a smaller player in the burger restaurant industry, with 2015 revenue of $295M4 – about 1.2% of McDonald’s revenue of $25.41B5. Their supply chain is less entrenched than a behemoth like McDonalds and they have greater flexibility. Additionally, since they are still rapidly expanding, they can test new non-beef products and build out infrastructure that’s not as dependent on beef.
  • Their brand is hip, innovative, and influential. Searching the hashtag #shakeshack yields over 500K+ posts on Instagram6. Shake Shack has built a cult following amongst influential millennials and they are in a position to start a trend that can go viral. The burger is a cultural staple of the western diet, so there needs to be a cultural shift in order for its popularity to decrease.
  • Their mission is “Stand for Something Good”. A screenshot from Shake Shack’s website below describes the company’s love for the planet. Developing a non-meat burger would perfectly align with this mission.

    Exhibit 2: From Shake Shack’s Website

 

Shake Shack has started to adapt but should do much more

While Shake Shack does not publicly acknowledge the impact that beef production has on the environment, they have done a few things that show they are thinking ahead:

  • Introducing new non-beef menu items. In January 2016, Shake Shack added the Chick’n Shack to their menu. According to Shake Shack Culinary Director Mark Rosati, the Chick’n Shack burger provides “a simple, pleasurable, uncomplicated experience, but with high-quality, responsibly sourced ingredients. 8
  • They claim to source regionally. Shake Shack’s VP of Supply Chain said in an interview that “Shake Shack keeps the menu small so that the company’s sourcing team can be engaged with artisanal and local suppliers.”9 Yet, it is unclear how diligent they are with their supplier criteria as they do not have publicized guidelines.
  • Established Good n’ Green climate change initiatives. On their website, under “Good n Green”, they list 8 different initiatives, ranging from recycling to oil management, but they don’t mention anything related to the impact of red meat on their menu.10

Given Shake Shack’s position as a mission-driven and fast-growing brand, and their commitment to ‘Standing for Something Good’, Shake Shack should lead the charge on developing a non-beef burger.

  • Plant based protein is just taking off. While Shake Shack already offers a Portobello mushroom burger, that just doesn’t cut it for most carnivores. Several companies are working to develop plant-based proteins that look, smell, and taste much more like meat. Impossible Foods could be a great partner for them – and producing their burger “requires a quarter of the water used to produce the same burger from a cow, 1/20th of the land and 1/8th of the greenhouse gas emissions.” 11
  • Chance to establish the future of fast food. Shake Shack can design and create a sustainable, delicious, and addicting all-American meal that’s not a beef burger and fries. This could be a major competitive advantage.
  • Mitigating risk resulting from beef regulations. Not only is commitment to reducing of beef production aligned with Shake Shack’s mission and a substantial business opportunity, but it is also mitigating the risk of future beef regulations. If beef production was to become regulated and the price of beef rose, their business model is put in jeopardy as it stands.

 

In Shake Shack’s annual report, they include their company values, including “We always find the “yes” and write the next great chapter in real time”.12  Shake Shake, I urge you to write the next great chapter of the hamburger.

 

Word Count (748)

 

Sources:

[1] http://www.fao.org/docrep/018/i3437e/i3437e.pdf

[2] http://www.openthefuture.com/cheeseburger_CF.html

[3] http://www.cnn.com/2015/09/29/opinions/sutter-beef-suv-cliamte-two-degrees/

[4] http://d1lge852tjjqow.cloudfront.net/CIK-0001620533/502ef3a1-3f50-4d75-ac3b-9ad0b4846543.pdf

[5] http://www.marketwatch.com/investing/stock/mcd/financials

[6] https://www.instagram.com/explore/tags/shakeshack/

[7] https://www.shakeshack.com/

[8] https://www.shakeshack.com/2016/01/14/flock-this-way-introducing-the-chickn-shack-debuting-at-u-s-shacks-january-14th-2016/

[9] https://www.greenbiz.com/article/shake-shacks-supply-chain-guru-sourcing-better-burgers

[10] https://www.shakeshack.com/stand-for-something-good/

http://d1lge852tjjqow.cloudfront.net/CIK-0001620533/502ef3a1-3f50-4d75-ac3b-9ad0b4846543.pdf

[11] http://www.impossiblefoods.com/

[12] http://d1lge852tjjqow.cloudfront.net/CIK-0001620533/502ef3a1-3f50-4d75-ac3b-9ad0b4846543.pdf

Previous:

Brave New Ocean: Opening Arctic Waterways Pose Challenges for US Navy

Next:

Coca-Cola: Taking the air right out of bubbling climate change issues

19 thoughts on “Shake Shack – Please, give us the burger of the future.

  1. Fascinating research on the impact that farming cattle for beef consumption has on the environment. When most people think of climate change, they turn to cars or manufacturing plants as the biggest polluters. However, as you indicate, 14.5% of worldwide greenhouse gases are due to livestock, compared to the fact that airlines contribute 2% to greenhouse gases, this statistic is staggering!

    Veganism is on the rise amongst millenials due in part to health but also due to the fact that millenials are more environmentally conscious. https://www.theguardian.com/lifeandstyle/2016/may/27/the-rise-of-vegan-teenagers-more-people-are-into-it-because-of-instagram

    This could become a key competitive advantage for Shake Shack moving forward so they are not left behind if eating trends change in the future.

  2. I could not agree more with this article. Beef consumption is a huge driver of global warming. Fun fact, cow flatulence contributes to about 20% of human-related methane in our environment (http://scienceline.ucsb.edu/getkey.php?key=2569). While it is going to be hard to change consumer preferences away from consuming meat, there are many things Shake Shack could do to encourage this behavior (many of which you’ve outlined in your blog post). In my opinion, meat in this country is too cheap, and does not fully capture the negative externalities it creates. While it would be highly controversial for Shake Shack to do so, I believe they should raise the prices on their meat options, in order to encourage more consumption of their vegetarian options. Additionally, you mentioned creating more vegetarian options, which I definitely agree with. If more restaurants would invest in creating delicious vegetarian options, perhaps more people would be inclined to consume less meat.

  3. Jordan – thank you for this compelling post and bringing to light the need for hip burger restaurants to initiate the change against using beef! I couldn’t agree more with everything you outlined, from the mission that should drive Shake Shack and the suggestions you recommend. I really liked how you suggested Impossible Foods as a potential partner — it launched in NYC this summer through Chef David Chang’s Nishi and culinary feedback raved about the burger: “Renfro, a longtime vegetarian, called the meatless burger a “dream come true” and raved about the patty’s beefy texture and aroma. She said it was the most realistic meat alternative she’s eaten.” (1) In addition to partnering with them, Shake Shack should certainly increase prices on its burgers, particularly when the burger served by Impossible Foods is at $12, a much higher price point than a burger at Shake Shack. While I do think this is a great cause, I am not sure how attractive it will be do Shake Shack management as it may impact profitability. What Shake Shack should also consider doing is to partner with other hip and trendy burger joints so together they can ensure that one company’s effort won’t lead to increased consumption at competitors. They could reach out to Umami Burger, Burger & Barrel and Park Soho. Together, these burger joints could lead the change to less beef consumption!

    (1) Robinson, Melia. “The plant-based burger that tastes like real meat is coming to the West Coast,” Business Insider, http://www.businessinsider.com/impossible-foods-coming-to-california-2016-10, accessed November 2016.

  4. This is SUCH an interesting article. There are now people looking into producing meat in labs. I find all of this a bit strange, if I’m honest. I like meat and I know many people who would stop going to a place if they changed to being more vegetarian and, whatever the sustainability of meat, the emotional link to the farm is one that predates the formation of cities.

  5. We cannot deny the impact that agriculture, and livestock in particular, has on climate change.
    However, I do not agree that Shake Shack is leading the way in “writing the next great chapter of the hamburger”, not do I think it would have the ability to influence how the industry functions as a whole. In my opinion, non-beef menus have the objective of targeting a different customer segment that was not previously able to enjoy Shake Shack, sourcing regionally is related to the trend seen in the quick service restaurants sector in which customers are looking for more authentic products, and the “Good n’ Green” initiatives sound like a Social Corporate Responsibility line without real impact.
    There is a need to educate the consumer, but especially a need to ensure it can find affordable, green alternatives. Only when those alternatives are available will we be able to see changes in the majority of the consumers’ behaviors.

  6. Great post on a highly under-reported but critically important contributor to climate change! I agree with your assessment that Shake Shack’s brand puts it in a unique position, relative to other burger chains, to be forward-thinking and innovative in offering more climate-friendly products. Another route that they could consider going, besides plant-based protein, is lab-cultured meat. A number of small start-ups, such as Memphis Meats (http://www.memphismeats.com/), are developing processes to create actual beef cells in the lab that could give us real hamburger without the cow flatulence.

    My biggest concern with these strategies (and, likely, Shake Shacks’) is customer willingness to pay. Most approaches to filling Shake Shack’s menu more sustainably (with the exception of switching to chicken) would likely cost the company more and therefore result in higher menu prices. Most of the research that I have seen on consumer behavior suggests that while many consumers say in the abstract that they would be willing to pay more for environmentally friendly goods, in practice they will only accept very small premiums on the prices they pay for “green” products. For example, here is a McKinsey study that looked at consumer willingness to pay to go green (http://www.mckinsey.com/business-functions/sustainability-and-resource-productivity/our-insights/how-much-will-consumers-pay-to-go-green). I thus wonder how much of a price increase Shake Shack’s margins could assume, and also what the role of consumer education should be to help shift consumer behavior, both at the burger counter and more broadly.

  7. As many have echoed- fantastic post that sheds light on a huge issue facing us today. It is quite surprising how much livestock contributes to climate change, yet it is truly one of the least talked about industries. It is my belief that this is because meat-eating is so entrenched in the majority of our societies, countries, and cultures. As such, being a burger restaurant, I think it will be impossible for them to remain competitive with an increased focused on just plant based protein or non-beef menu items. It’s a fundamentally different business model. To that point, I really like Evan’s suggestions above to look at lab-based meats. I think this would be very innovative, would not comprise their business model, and could signal to the industry at larger that a fairly big player like Shake Shack can sustain themselves and their business through completely new sourcing practices.

  8. Great post, Jordan. I identify with this sentiment as I was actually raised as a vegetarian by my mother, and actually wrote a high school research paper on vegetarianism. My mother is still a vegetarian to this day.

    From my experience, traditional vegetarian burgers (“veggie burgers”) taste nothing like meat. And for most Thanksgivings, we would eat tofurky http://www.tofurky.com/ — not exactly a turkey. I have also read about Impossible Foods and think it is great. As someone who loves meat now, despite not supporting cruelty to animals, I would certainly be a buyer of the Impossible Burger.

    1. This tofurky sounds wonderful. I’m going to have to order one for an HBS friendsgiving event

  9. Great article! I completely agree with you regarding the need to introduce meat substitutes in the fast food industry. However, Shake Shack is probably concern about consumers’ perception of lab developed meat. Consumers, like myself, would need to be educated as to any potential side effects of a lab grown burger. Perhaps a more feasible plan would be to introduce a vegetarian based burger and slowly move the consumer based to a more novel product.

  10. Really interesting post, Jordan! As someone who loves meat but is well aware of the environmental impact, I would love to see a more sustainable solution more widely available. A number of years ago, my folks made a commitment to only buy sustainably farmed grass fed meat, but needless to say it still has an environmental impact (and it is expensive enough that it has required us to substantially cut down on our consumption.) I wonder, though, what the right path to expansion for this kind of product is. I take your point quite well that the behemoths like McDonald’s aren’t likely to be leaders in this space, but is Shake Shack the right alternative? Might high-end restaurants (with higher prices and margins) be a better way to change tastes here? Would higher end restaurants do enough volume to put a dent in the demand? I wonder if there are parallels that we could look at historically to see how tastes have evolved over time (i.e. whether tastes tend to evolve in more of a top down or bottom up fashion.)

  11. Great Post! Love this issue as I feel like others said above that it is not discussed as widely as other sources of climate change. However, I am concerned with how much change Shake Shack can bring into the fast food industry into the future. With only 100 restaurants open as of August 2016 and second quarter growth for stores being 4.5% when last year’s was 12.9% (http://www.marketwatch.com/story/shake-shacks-growth-plan-gets-mixed-response-from-analysts-2016-08-11), how much change can they initiate in the marketplace? Shake Shack would need to work with other smaller burger joints to enact change, but even then, can this impose a change in practices to influence the big players like MacDonald’s or Burger King that are nationwide? I hope so! I look forward to seeing their progress!

  12. Fascinating blog! I couldn’t agree more with the choice of company and your suggestion on how and why Shake Shack should take the lead in being part of the global warming combat. However, there are two key things that I wonder. Firstly, from the Shake Shack perspective and wondering if this will have a negative impact on their revenue. I can’t help but wonder if people would switch restaurant to find wider variety of meat menus. Secondly, I wonder how much reduction of beef menu would help. Where I’m coming from is whether beef eater will just continue to select the limited beef menu making the positive impact negligible.

    That being said, I think it’s a great idea and doing something is still better than not doing anything to help the world at all!

  13. Jordan, thanks for the interesting read! I think 90% of people are completely unaware of the impact of livestock on greenhouse gas emissions (14.5% is shocking). I read over Shake Shack’s “Good n Green” initiatives, and I think they very intentionally neglect to mention the impact of red meat on their menu. Red meat is absolutely fundamental to Shake Shack’s business, and though some consumers may gladly switch to a meatless alternative, I think they would be in the minority. Shake Shack should certainly cast a wider net and capture more consumers by providing more poultry and meatless options, but their core competency (and competitive advantage) will always be in beef.

  14. This is an interesting post on some of the lesser known consequences of beef production. I wonder what the difference (in terms of CO2 output and other harmful environmental effects) is between cattle and other protein forms when you factor in fertilizer, diesel fuel required to power the tractors that till fields and dig irrigation ditches, etc. Also, have you examined the different variants of insect protein? I know that cricket protein is becoming more popular among some fitness enthusiasts. A friend of mine co-founded this startup that sells cricket protein and advertises its environmental benefits on his website. (https://lithicnutrition.com/crickets-101/)

  15. Amazing post. I agree. Shake Shack should do it, they have the most visibility in the industry and can thus lead the change.

  16. Very interesting article! I agree that given Shake Shack’s strong millennials customer base, the restaurant chain has potential to reshape the burger industry and become more environmentally conscious.

    My concern with Shake Shack collaborating with companies that produce plant-based proteins is that Shake Shack may need to completely reposition its brand image which it has spent years creating. Will phasing out beef burgers and promoting non-beef burger take away the trendiness of the brand and turn Shack Shack into a health-conscious restaurant chain like Protein Bar?

    In addition, I wonder how Shake Shack customers will respond to non-beef burgers. It would be great if Shake Shack conducts a survey to see whether introducing additional non-beef burger is a good investment. In addition, it can try launching a pilot program at one of the locations to gauge how customers respond to the new non-beef offering.

  17. Loved the post. The future is food will certainly determine how many aspects of our lives shape out. While I agree completely with you post, I keep going back to the tyranny of the short-term that public companies face. This transition, while very much worth pursuing, would bring growing and transitional pains. I wonder whether a public company could really bet on the long term while, perhaps, missing their quarterly results.

  18. Jordan, I never thought Shake Shack could be beseeched to alter their menu items in such a passionate manner! I wonder, however, if Shake Shack is the appropriate company to bring the plant-based burger to the masses. Food production and marketing today, even at the level of the fast food industry, appears heavily influenced by the organic, single-origin, traceable nature of the ingredients, including beef. For this reason, a plant-based burger appears at odds with the ‘natural’ approach currently in fashion. Although the beef-less burger would be far more sustainable, it could be considered more of a ‘Franken-food’ by potential consumers. One possibility I find for introducing such an option would be running promotions in which the real burger and plant burger were directly compared in a taste-test (similar to Pepsi vs. Coke). If consumers realized for themselves that they preferred Shake Shack’s plant-based burger, this would approbate the company’s ambition to combat climate change by reducing the number of cattle used.

Leave a comment