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New Year's menu special: Shake Shack IPO

Friday, January 02, 2015 - 01:46

The upcoming initial public offering of Danny Meyer's Shake Shack burger chain follows successful offerings by chains like El Pollo Logo and Habit Restaurants. Bobbi Rebell reports.

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The buzz is building for the upcoming Shake Shack initial public offering- Americans are literally lining up for premium burgers like the ones sold at the Danny Meyer chain- willing to pay higher prices to get better quality food. Reuters' Anjali Athavaley: SOUNDBITE: ANJALI ATHAVALEY, REUTERS CORRESPONDENT (ENGLISH) SAYING: " You know no antibiotics, no hormones greater variety of toppings for personalization and then greater choice of drinks like beer and wine. This is a type of restaurant that is doing well right now and so shake shack fits squarely into that segment." In fact while fast food burger sales- think McDonalds and Burger King- have actually been falling- sales at premium burger chains- like Five Guys Burger and Smashburger shot up 9 percent in 2013 according to Technomic. Shake Shack- which started as a hot dog stand- has 31 company operated and 5 licensed locations in 10 states. The company hopes to eventually have at least 450 U.S. locations. But it will have to pick its spots carefully. Profit margins in affluent Manhattan are a rich 30 percent. Outside the island- 22 percent. But the timing of the deal is probably just right, coming off a strong year for restaurant deals. SOUNDBITE: ANJALI ATHAVALEY, REUTERS CORRESPONDENT (ENGLISH) SAYING: "So far investors seem pretty bullish. There is a lot of factors going in shake shack's favor. One is that this has just been- or 2014 rather has been a hot year for restaurant IPO's. You've had burger chain habitat you've had El Pollo, you've had Zoe's and these stocks have generally performed well over the course of the year. " And hot on its heels- analysts say rival Smashburger is probably next up on the IPO menu.

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New Year's menu special: Shake Shack IPO

Friday, January 02, 2015 - 01:46