Shake Shack has been accelerating its expansion in 2024, aiming to open approximately 80 new restaurants over the course of the year. However, amid this rapid growth, the burger chain is also facing the closure of some existing locations. In a recent U.S. Securities and Exchange Commission (SEC) filing, Shake Shack revealed its plans to shut down nine struggling restaurants across three states.
According to Restaurant Business, these closures are the result of a routine evaluation of company-owned locations. The chain cited changes in the trade areas surrounding these locations and, in some cases, competition from other nearby Shake Shack outlets as reasons for their underperformance.
Despite its fast-paced expansion, Shake Shack acknowledges that not all of its restaurants are positioned for success. “These Shacks are not projected to provide acceptable returns in the foreseeable future,” the SEC filing stated.
As a result, the company expects to close these underperforming stores by September 25. The affected locations include several in California—Oakland, Bunker Hill in downtown Los Angeles, downtown Culver City, Koreatown in Los Angeles, Silverlake, and Westfield Topanga in Woodland Hills—as well as restaurants in Polaris, Ohio, and two in Texas at the Houston Galleria and Montrose.
This marks a significant moment for the company, as a spokesperson noted to Restaurant Business that it is the first time Shake Shack has decided to close stores for reasons unrelated to construction. While this may be a difficult transition for staff, the company has pledged support for those affected. Management and hourly workers at the closing locations will be offered the chance to transfer to other Shake Shack restaurants. For those who choose not to relocate, Shake Shack has committed to providing 60 days of pay to help ease the transition.
While these closures might appear concerning at first glance, Shake Shack sees them as part of a larger strategy to set the company up for long-term success. The chain has already reported a 4% increase in same-store sales for the latest quarter, though it has also experienced a slight dip in customer traffic, with a 0.8% decrease. By eliminating underperforming locations from its portfolio, the company aims to streamline operations and focus on higher-return opportunities.
Shake Shack’s CEO, Rob Lynch, emphasized the company’s commitment to sustainable growth and ensuring the best possible experience for guests. In a statement shared with Eat This, Not That!, Lynch explained that, after careful consideration, the decision was made to close a small group of Shacks due to underperformance. He reiterated that Shake Shack is in a strong growth phase, with plans to open 40 new company-owned Shacks and another 40 licensed Shacks this year.
Despite the closures, Lynch expressed confidence in the brand’s future, highlighting the company’s focus on supporting team members through the transition while continuing to expand its presence across the country.