By Lisa Baertlein and Avik Das
(Reuters) - Growth-hungry investors snapped up shares offered by Shake Shack Inc (SHAK.N), setting the stage for a sizzling debut for the New York-based burger chain when its stock starts trading on Friday.
Shares of the company, which has won a cult following for its rich milkshakes and hormone- and antibiotic-free burgers, priced at $21 each, an underwriter said, valuing the chain that started as a hotdog cart in a park at about $745 million.
Shake Shack raised $105 million from the initial public offering of 5 million shares.
Underwriters had set an expected price range of $17-19 per share, raised from an initial $14-$16 due to strong demand.
The IPO market has been particularly fruitful recently for so-called fast-casual restaurant operators hoping to replicate the scorching growth of Chipotle Mexican Grill Inc (CMG.N).
Shares of Habit Restaurants Inc (HABT.O), another gourmet burger chain, have risen more than 80 percent since their market debut two months ago.
Customers in Manhattan and Chicago often wait in long lines to get into Shake Shack's restaurants.
"It's a cult," said Bob Goldin, an executive vice president at consulting firm Technomic.
The chain attracts a relatively affluent clientele, which spends roughly $30 for a meal for two - considerably more than diners spend at struggling fast-food giant McDonald's (MCD.N).
Shake Shack's challenge, Goldin and other experts said, is not to expand too quickly.
Ubiquity, they said, often works against cult chains.
Shake Shack has 63 restaurants, more than half outside the United States. The company has said it plans to open 10 U.S., company-operated restaurants each year and could eventually grow to at least 450 locations.
Shake Shack, founded by restaurateur Daniel Meyer in 2001, waited five years to open its second restaurant.
When Chipotle went public in 2006, it had almost 500 U.S. restaurants. The chain is known for its simple, customizable food made from antibiotic-free meats and fresh produce.
Investors love Chipotle's rapid growth. The company, which had about 1,700 U.S. restaurants, is known for cranking out ever-higher unit sales without increasing costs.
While Shake Shack has been slower to add restaurants, its domestic average annual sales of $5 million per location for 2013 were about double Chipotle's.
J.P. Morgan and Morgan Stanley were lead underwriters for the IPO.
(Additional reporting by Anil D'Silva in Bengaluru; Editing by Lisa Von Ahn and Ted Kerr)