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There were a couple of interesting stories over the weekend about Shake Shack, the upmarket hamburger-and-shake chain that went public last week and, at least in the short term, exceeded investors' expectations. Both pieces looked at an issue for Shake Shack that faces most companies - how much growth is too much.

Danny Meyer, the New York-based restaurateur who is the founder and CEO of Shake Shack, always has talked about his aversion to growth for growth's sake. The Washington Post writes that "Meyer's approach to growth so far gives a sense of how he and his team might manage it in the future. Yes, the prospectus outlines that Shake Shack plans to open 10 new locations each year in the United States, to reach a total of at least 450 domestic outposts. But it's also telling to examine the way Shake Shack has been expanding abroad. Of the 63 current Shake locations, 27 are already overseas in cities like Dubai, London and Istanbul." By not bunching up locations in cities around the US, the company manages to keep its units as "something of a novelty."

The Post goes on: "Meyer has already instilled the go-slow approach into one of the company's standing mantras. At four places in the company's prospectus, and hanging on the wall of executives' offices, is this line: "The bigger we get, the smaller we need to act." This speaks well to the company's awareness that, if left unchecked, getting big can be the enemy of the kind of community-minded, employee-driven, hospitality-focused business they want to run.

"Staying true to a brand's roots, and saying no more than yes, just gets harder and harder after going public. By baking that stay-small mentality into the way Shake Shack talks about its culture, its decisions and its approach to customers, Meyer has at least given the company a shot at avoiding the overexposed, mission-drifting fate of too many companies."

To be fair, not everybody agrees. The Los Angeles Times has a column suggesting that "it's not especially comforting that Shake Shack's explanation of what makes it 'special' is written in corporatized New Age gibberish. The principles of business 'championed by Danny Meyer,' according to its public prospectus, include recruiting and developing "a team with the innate 'personality to please' that cannot be taught. We look for people who are warm, friendly, motivated, caring, self-aware and intellectually curious team members.... Our team is trained to understand and practice the values of Enlightened Hospitality: caring for each other, caring for our guests, caring for our community, caring for our suppliers and caring for our investors."

The LA Times puts it in stark terms, at least from an investment perspective - Shake Shack has to be careful not to allow itself to become Krispy Kreme or Crumbs; and instead needs to follow the path taken by Chipotle.
KC's View:
I tend to share the Washington Post view of Shake Shack ... if I were going to invest in the company, it would be with an eye to the long-term, not short-term profits. I don't see their statements of principle to be "corporatized New Age gibberish." (I feel bad if we've gotten to the point that statements of principle are seen in such harsh terms. And I'd feel better, for example, about Haggen's growth from 18 to 164 stores if they were saying similar things...)

Is it hard to grow such a chain and culture? Sure. But it is a step in the right direction that the folks at Shake Shack at least seem to understand that.