Shake Shack CEO Randy Garutti will be retiring from his role in 2024. Shake Shack (SHAK) is planning to keep Garutti on as an advisor until the end of 2024 to transition the company's new CEO.
Yahoo Finance's Bradley Smith and Seana Smith discuss the news and take a look at the stock and analyst reaction to the news. For more expert insight and the latest market action, click here to watch this full episode of Yahoo Finance Live.
BRAD SMITH: Well, some leadership shake UPS at Shake Shack today. The food chain announcing its CEO Randy Garutti is stepping down after more than two decades at the company. Garutti going to retire next year. Until then, he will stay in his role to help choose a successor.
After he retires, the company plans to keep him on as an advisor until the end of 2024 to transition the new CEO. So a shake up in the Shake Shack land and ultimately in burger land. In a message, he did say, "I never quite knew when this day would come, but in his heart arriving at the realization for him, the family, the company, this is the right time."
And ultimately, 24 years ago Danny Meyer hired him and said, "I'm not sure you're ready for this, but I'm going to give you a shot to lead Tabla." That was the Indian restaurant fronting Madison Square Garden in Manhattan. And then over time, Danny continuing to give him a shot. So really just showing how some of the other leaders in the industry pouring into him and then getting him into the mindset to run a Shake Shack.
SEANA SMITH: Yeah. Danny Meyer was certainly or has certainly been a real mentor I think to Garutti here over the years. You mentioned the fact that he was a general manager of Tabla and Union Square Cafe. He was actually the youngest ever general manager there. So it really speaks to the confidence that Danny Meyer had in him or has had in him now for years and how quickly he has been able to scale Shake Shack's business.
So it's interesting when you take a look at the share price reaction to this news. There is some optimism on the Street just in terms of what exactly the successor could be or what it could mean here for the business. I was taking a look at some of the investor early-- excuse me-- analyst reaction to this news.
And Cowen was out saying that there is an opportunity here to hire an executive that does have a proven track record in scaling growth. And when a lot of times when we talk about Shake Shack, it's exactly what needs to be done in order to further scale that growth and capitalize on some of the success that the company has seen over the last several years.
So the fact that now they could have the opportunity to do this with someone from the outside coming in and having a clean slate, taking a fresh look at Shake Shack's fundamentals seeing exactly where they can exceed, where maybe it makes sense for more of a strategic shift away from their current offerings right now.
So the fact that they can start almost from-- not from scratch, but from a brand new perspective here and really have the ability to launch a Shake Shack into the next phase, I guess, of its growth. Could be and it seems to be something that the Street is at least encouraged about for now.
BRAD SMITH: I'll round this of with three thoughts that I think and three major items that whoever that next CEO is going to have to think about. Its appetite, its price, and its technology. You've got more people who are looking across what the delivery mechanisms are and the technology that's infused into that experience.
You've got the appetite with some of the weight loss drugs that we've been talking about that could shift. And you've got the price that consumers, especially going into a potential recession are going to try and figure out, OK, do I want to pay $18 for a burger, fries, and a really good root beer float at the end of the day?
SEANA SMITH: I was going to say, that and I'll also tack on one more drive throughs.
BRAD SMITH: Yes.
SEANA SMITH: Why don't they have more?
BRAD SMITH: Yeah.
SEANA SMITH: They should.
BRAD SMITH: Why not?
SEANA SMITH: They should capitalize on that. You don't even have to get out of your car. A lot of times people go there because it's convenient, quick in and out, even better.
SEANA SMITH: Just throw it at me. I'll catch it.