Shake Shack, the hipster-ish burger chain that began as a hot dog stand in Madison Square Park a decade ago, was valued at nearly $2bn when it floated on the New York stock exchange on Friday.
Shares in the company soared by more than 150% to $52.50 before easing back to $48 – still more than double the $21 offer price.
At the high, founder Danny Meyer’s 31% stake was worth nearly $400m. Meyer, 56, an established NYC restaurateur, owns popular establishments Blue Smoke, Gramercy Tavern and Union Square Cafe.
“We didn’t have any dreams that today would ever come,” he told CNBC from the floor of the stock exchange. “We wanted to open a hot dog cart to help … Madison Square Park. And when you put a great product together with amazing people with the kind of heart that you have felt here on the floor, these people are doing it, and it’s our staff that this day is for.”
The company, which now operates 63 outlets in nine countries, had already increased its initial public offering (IPO) price range from $14-$16 a share to $17-$19.
The company tweeted that it would celebrate the IPO success by giving out free burgers outside “the New York SHACK Exchange”.
Line 'em up: we're serving free Shack 'til 2pm outside the New York SHACK Exchange @nyse pic.twitter.com/E7ltchuzLA
— SHAKE SHACK (@shakeshack) January 30, 2015
It is also “spreading some Shack love” throughout New York City, with an open-top Shake bus touring Manhattan.
Shake Shack may sound like an unusual name for a burger joint, but it’s catchier than the other options Meyer was tossing around when he first set up shop in 2001. “We entertained a bunch of names for the kiosk (most of them pretty bad – like Custard’s First Stand, Dog Run and Madison Mixer) and ultimately settled on Shake Shack,” he said in a letter to prospective shareholders.
The company, which has opened across the Middle East, Russia, Turkey and in a prime location in London’s Covent Garden, is growing sales fast. Revenue in the first nine months of 2014 rose by 41% to $84m. With the funding from the IPO, Meyer hopes to open 10 new company-owned stores a year, with a target of 450 in the long term.
Shake Shack’s good fortune comes at the expense of McDonald’s, which last week reported its worst results in a decade and axed its chief executive.
The departure of Don Thompson, the first African American chief executive of McDonald’s, was announced on Wednesday night. He will be replaced by Briton Steve Easterbrook, the company’s chief brand officer and the former boss of McDonald’s in the UK and northern Europe.
Thompson was axed under pressure from investors. Last week, McDonald’s reported a 15% fall in annual profits, to $4.7bn.
