Can virtual brands have a real impact on brick and mortar? What’s driving Shake Shack’s appetite for growth? Can three chains operate under one roof? Answers to these questions and more This Week in Foodservice. 

Shake Shack has a big appetite for growth.

The burger chain plans to grow to 1,500 corporate locations over the long term. This represents a significant uptick compared to its previous proclamation of hoping to hit 450 company-owned units. Shake Shack had grown to 329 company-owned units by the end of 2024, the company notes.

The new company-owned units will be in addition to any franchised and licensed operations the chain has.

What gives Shake Shack confidence it can hit such a lofty goal? Well, strong unit economics for starters. The chain has average unit volumes of $4.1 million and an operating margin of 22.7%, per an analysis from The Motley Fool.

Another reason to believe this may work well for Shake Shack is the fact that the chain continues to explore ways to make its locations more efficient. These efforts include smaller units, adding drive through service and enhanced kitchen productivity.

Foodservice News

• The growth and way operators use virtual brands continue to evolve. Take, for example, Virtual Dining Concepts. The company behind Mr. Beast Burger now sees strong demand for its Man Vs Fries concept, per Restaurant Business. The burrito and loaded fries concept was founded in 2018 and restaurant chains like California Pizza Kitchen and One the Border now use it to generate extra revenue. Some are even putting items from Man Vs Fries on their restaurant menus.
• How many restaurant chains got new owners in 2024? Twenty seven of the top 1,500 restaurant chains changed ownership last year, per data from Technomic. Jersey Mike’s and Tropical Smoothie Café were among the largest and both were acquired by Blackstone. Many industry observers expect an improving economy and lower interest rates could lead to even more merger and acquisition activity in the chain restaurant space in 2025.
• Can three brands operate in harmony under one roof? We will soon find out. FAT Brands will open a tri-branded restaurant featuring a collection of snack-based concepts. The Roanoke, Texas-based unit features menu items from its Great American Cookies, Marble Slab Creamery and Pretzelmaker “We continue to see an increase in snacking occasions as an industry,” said Allison Lauenstein, President of Great American Cookies, Marble Slab Creamery and Pretzelmaker. “What better way to cater to that than by providing an even greater variety of sweet and savory treats for our fans, all under one roof! Looking ahead, we plan to continue to strategically grow this tri-branded model.”
• Another hospitality-based company is about to become a publicly traded entity. By the end of this month, multiconcept operator FAT Brands plans to spin off its Twin Hospitality division into a publicly traded company. This includes the rapidly ascending sports bar concept Twin Peaks and barbecue chain Smokey Bones. FAT Brands acquired Twin Peaks in 2021 for roughly $300 million. The sports bar is now said to be worth $1.2 billion, per an FSR story.
• Starbucks is planning another corporate reorganization. The latest effort seeks to make sure “all work has a clear and accountable owner who can make decisions. The company also needs to reduce complexity and silos,” per an Associated Press story. Starbucks plans to communicate the layoffs and updated structure by March The Seattle-based coffee giant unveiled a new leadership structure in March of 2024. This news comes on the heels of Starbucks reversing its longstanding open-door policy.
• Fern bars are starting to sprout once again, per a Food & Wine story. These bars are known for their carefree environments with green décor and drinks that appeal to a variety of consumers. Probably the most notable fern bar is TGI Fridays, but that chain’s had some challenges of late. Still, Food & Wine notes the fern bar revival, which includes operations in cities such as Baltimore, Dallas, Detroit and New York City, maybe a reaction to the exacting craft cocktail movement that kicked off in the early 2000s. This is not, however, the fern bar’s first renaissance Several years ago, restaurant development + design took a look at the reemergence of the fern bar.

Economic News This Week

• Sales at U.S. retail and foodservice operations increased 0.4% in December 2024 compared to the previous month, per data from the U.S. Census Bureau. This also represents a 3.9% increase compared to December 2023. Total retail sales for the 12 months of 2024 grew 3.0% compared to 2023. For the 12-month period ending December 2024, sales at restaurants and bars increased 4.6% compared to 2023. Overall, some economists saw this as a strong report that will boost estimates for the fourth quarter gross domestic product, per a Yahoo! Finance story. The strong performance in the fourth quarter also is an indication that the economy remains strong heading into 2025.
• The Consumer Price Index increased 0.4% in December, per the U.S. Bureau of Labor Statistics. This comes after a 0.3% November increase. For the 12 months ending in December, the CPI increased 2.9%. The December core index for all items less food and energy rose 0.2%, which is less than the 0.3% in each of the previous four months. This was seen as an indication that inflation could continue to cool in 2025, per a Yahoo! Finance report. Notable for the foodservice industry, for the 12 months ending in December, food away from home prices increased 3.6%, which is twice as much as food at home prices.
• Housing permits issued decreased 0.7% in December compared to the previous month, per U.S. Census Bureau data. This is also 3.1% less than December 2023. There was some good news, though, as permits for single-family homes increased 1.6% compared to the previous month. This represents a 10-month high, per a Reuters story. An estimated 1.47 million housing units were authorized by building permits in 2024, which is 2.6% less than 2023.
• Initial jobless claims increased by 14,000 for a total of 217,000 for the week-ending January 11, 2025, per data from the U.S. Department of Labor. Despite the uptick in claims, many economists still see the U.S. jobs market as being stable, per this Reuters story. The 4-week moving average was 212,750, a decrease of 750 from the previous week.
• Industrial production ended 2024 with some momentum. It increased 0.9% in December and 0.2% in November, per U.S. Federal Reserve data. In December, manufacturing output rose 0.6% after gaining 0.4% in November. At 103.2% of its 2017 average, total IP in December was 0.5% greater than its year-earlier level. Capacity utilization stepped up to 77.6%, a rate 2.1 percentage points less than its long-run (1972–2023) average.