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Shake Shock: Spot The Fast Food Outlier

Tyler Durden's picture




 

Following news that recently IPOed cult burger joint Shake Shack is preparing to start selling... chicken, its stock has gone even more parabolic than before and is up nearly 10% today alone hitting a new all time high $3.2 billion market cap.

While this relentless rise is no doubt facilitated by the stock being hard-to-borrow and having a triple digit borrow cost, thus making shorting effectively impossible, one quick look at fundamentals, irrelevant as they may be in this market, put the company's valuation per restaurant in perspective not only to such established fast food names as McDonalds, but other recent "hot" restaurant debuts.

 

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Thu, 05/21/2015 - 12:48 | 6117824 i_call_you_my_base
i_call_you_my_base's picture

Is this a short in the Yellen newsletter?

Thu, 05/21/2015 - 12:58 | 6117895 max2205
max2205's picture

Moar parabolic'er. .. fixed it 

Thu, 05/21/2015 - 13:01 | 6117909 Temporalist
Temporalist's picture

Yellen told the McDonald's protesters to buy ShitShakeShak for their inheritance that they would have if only they were wealthy.

Thu, 05/21/2015 - 14:38 | 6118408 boogerbently
boogerbently's picture

Statistics.....phhhhht.

 

They have NO P/E because they're losing $1.03 per share.

Tell me how valuable they are in a year !

Thu, 05/21/2015 - 14:54 | 6118485 Bangin7GramRocks
Bangin7GramRocks's picture

You'll be sorry when they unleash the "Breakfast Burger"! Look out Apple when this bohemoth takes over the A.M.! 

Thu, 05/21/2015 - 14:55 | 6118493 ncdirtdigger
ncdirtdigger's picture

But they make it up on volume!

Thu, 05/21/2015 - 16:16 | 6118866 tc06rtw
tc06rtw's picture

… they make it up
        ENTIRELY !

Fri, 05/22/2015 - 17:04 | 6122875 boogerbently
boogerbently's picture

Like FB.

Thu, 05/21/2015 - 13:47 | 6118137 ZippyBananaPants
ZippyBananaPants's picture

No Options traded?  Fuck I will have to wait.....

Thu, 05/21/2015 - 13:13 | 6117953 delacroix
delacroix's picture

they must have gotten a good deal on wholesale chicken, from somewhere.

Thu, 05/21/2015 - 14:02 | 6118213 NotApplicable
NotApplicable's picture

I'd guess Tyson, but then again, I don't really consider that to be chicken.

Thu, 05/21/2015 - 14:04 | 6118227 Bastiat
Bastiat's picture

China?

Thu, 05/21/2015 - 12:50 | 6117833 pods
pods's picture

Wow, that is more than the Grilled Cheese Trucks!

Thu, 05/21/2015 - 12:54 | 6117862 813kml
813kml's picture

Totally different market, burgers could never be sold from a truck.

Thu, 05/21/2015 - 13:57 | 6118192 JRobby
JRobby's picture

WTFN?

Thu, 05/21/2015 - 14:35 | 6118393 CarpetShag
CarpetShag's picture

took the words out of my mouth (with the cheese)

Thu, 05/21/2015 - 12:50 | 6117835 Chuck Knoblauch
Chuck Knoblauch's picture

The word is "over-subscribed"

I loved Password.

Thu, 05/21/2015 - 12:59 | 6117902 KnuckleDragger-X
KnuckleDragger-X's picture

Optimism and rumors will take you far nowadays.....

Thu, 05/21/2015 - 13:27 | 6117977 Chuck Knoblauch
Chuck Knoblauch's picture

Every kid loves a new balloon full of FEES.

 

Thu, 05/21/2015 - 12:51 | 6117841 El Vaquero
El Vaquero's picture

A real burger joint:

 

http://www.buckhornburgers.com/about.html

If you're in a hurry, you might not want to stop as we are a small place with a small kitchen and everything is cooked fresh and nothing is pre-made, so it takes a little longer!!If you're in a hurry, you might not want to stop as we are a small place with a small kitchen and everything is cooked fresh and nothing is pre-made, so it takes a little longer!!

Thu, 05/21/2015 - 12:56 | 6117876 kchrisc
kchrisc's picture

Mine is Jake's Hamburgers in Dallas.

Great burgers, and great environment to enjoy them in.

Liberty is a demand. Tyranny is submission.

Thu, 05/21/2015 - 13:05 | 6117930 El Vaquero
El Vaquero's picture

The Buckhorn is in San Antionio, NM.  It's about a hundred miles from me, so I don't frequent it very much for the obvious reasons.  It's in a sleepy little shithole, and it got ranked in the top 10 in the nation for burger joints several years ago.  If you're ever on I25 in Southern NM, stop off.  The place across the street, the Owl Cafe, isn't bad either. 

 

More local to me are Bob's Burgers and Blake's Lota Burger.  Sometimes the chile at Blake's will make your nose run. 

Thu, 05/21/2015 - 13:46 | 6118129 Freddie
Freddie's picture

You ever go to Maria's in Santa Fe homey?

http://marias-santafe.com/menus/

I sometimes go there with my friend Pico.

https://www.youtube.com/watch?v=HmtD-q_Hm0k

Thu, 05/21/2015 - 12:52 | 6117849 Billy Sol Estes
Billy Sol Estes's picture

McShithole

Thu, 05/21/2015 - 12:53 | 6117854 yudd
yudd's picture

too bad i cant buy put options on this

Thu, 05/21/2015 - 17:53 | 6119191 truthserum
truthserum's picture

Put options are always a sucker's play. Not only do you have to pay the bid ask spread on the option which is sizable in percentage terms, you have to pay the insurance premium for requiring the seller to take on the risk, and you pay exorbitant broker fees again as a percentage.

At least make it a little bit challenging for the smart guys on the street to take your money.

Thu, 05/21/2015 - 12:56 | 6117881 SillyWabbits
SillyWabbits's picture

It's a New Yawk Thang!

Thu, 05/21/2015 - 12:58 | 6117892 Sam Clemons
Sam Clemons's picture

Where's Chipotle?

Thu, 05/21/2015 - 14:36 | 6118397 Almost Solvent
Almost Solvent's picture

The center of the Chipolte universe is the toilet bowl.

Thu, 05/21/2015 - 12:58 | 6117893 Osmium
Osmium's picture

Kinda off topic, but what happened to the 7.5 year itch?  weren't we supposed to have crashed by now?

http://www.zerohedge.com/news/2015-04-24/75-year-itch-starts-next-week

And don't get me started about this being a schmegma year.

Fri, 05/22/2015 - 10:12 | 6121299 auracle
auracle's picture

And don't get me started about this being a schmegma year.

ok that was funny.

 

Thu, 05/21/2015 - 12:59 | 6117899 Atomizer
Atomizer's picture

Can I have a liquidated lumber flavored drum stick to go?

Thu, 05/21/2015 - 13:11 | 6117932 Ajax_USB_Port_R...
Ajax_USB_Port_Repair_Service_'s picture

Prepared in China. Fried is USA.

I'll have an oak flavored milk shake with mixed hardwood sprinkles please.

Thu, 05/21/2015 - 13:01 | 6117903 Ajax_USB_Port_R...
Ajax_USB_Port_Repair_Service_'s picture

QE3 Pork Shack ... comming SOON!

 

Right now, I'm in Wisconsin. I see a real market here for a chain of CHEESE SHACKS!

Thu, 05/21/2015 - 13:03 | 6117920 Temporalist
Temporalist's picture

Deep fried bacon wrapped cheese shacks.

Thu, 05/21/2015 - 13:00 | 6117908 aliki
aliki's picture

$80.00 is the line in the sand. it breaks that, stock could get smashed purely on techincals (once it broke up thru a few days ago after initially setting resistance there on the 6th of may, it was all-systems-go straight up as stops got tripped & im guessing thats where they are now to the downside as well).

fundamentally, if im the MCD CEO, im not buying back my own stock or issuing dividends. im buying as much SHAK as i can and possibly reversing the error of selling their CMG stake. MCD is F'D so they may as well take a shot IMO with fast casual before they go the way of the dinosaur.

all that being said, i think i heard the valuation that ZH i believe is stating here (analyst on CNBC noted this) that SHAK is valued at $45 million per store? they better intend on growing & expanding like a NFLX or AMZN if thats the case. any downtick in their sales and this thing will get mangled from that point of view IMO. really walking the tight-rope on a fundamental basis (probably why i don't really use funny-mentals; can cook the books, can't cook the charts - price and volume never lie).

Thu, 05/21/2015 - 13:38 | 6118091 TheReplacement
TheReplacement's picture

Sorry but Al Gore hasn't invented streaming burgers and fries yet.  Word is that Brian Williams had to take one for the team the last time the simulated it in the lab.

Thu, 05/21/2015 - 13:57 | 6118187 aliki
aliki's picture

my point being they are gonna have to have the mind-set where they wanna open alot more SHAK locations & have extremely high level of successes as they are in their NY locations are right now. extremely unlikely because A. they have nailed lightning in a bottle for the time being in the NY market and B. there is zero guarantee they can keep up this level of volume. extremely high risk scenerios especially given where the stock is right now on a fundamental basis; they are factoring in everything of alot of things to go right.

Thu, 05/21/2015 - 15:00 | 6118520 The_Dude
The_Dude's picture

+1 for actual discussion instead of the 1-line snark that ZH is devolving to...

Thu, 05/21/2015 - 13:02 | 6117916 Seasmoke
Seasmoke's picture

EET MOR CHIKEN. 

Thu, 05/21/2015 - 13:04 | 6117926 Dixie Flatline
Dixie Flatline's picture

Isn't a shake shack a strip club?

Thu, 05/21/2015 - 13:31 | 6118060 sdmjake
sdmjake's picture

you're thinkin of the 'shoe show'...

Thu, 05/21/2015 - 13:04 | 6117928 williambanzai7
williambanzai7's picture

Do they have a Chinese CEO and what happens if he quits?

Thu, 05/21/2015 - 13:05 | 6117929 Yen Cross
Yen Cross's picture

     Here's the Madison Square Park real time , Shack cam. lmfao.

    Madison Square Park, NYC | Shake Shack

   Look at the sheep eating their $5-7.00 pink slime.

 

Thu, 05/21/2015 - 15:03 | 6118546 The_Dude
The_Dude's picture

I checked it (at 3pm EST) and they were showing a video grab at 12 noon EST (with a huge line of course)...a little reality distortion to support an overblown stock price or was the webpage time screwed up?

Thu, 05/21/2015 - 13:11 | 6117959 Catalonia
Catalonia's picture

Even 1 milllion per restaurant sounds way too much

Thu, 05/21/2015 - 13:21 | 6117978 thunderchief
thunderchief's picture

Americans are so trained and conditioned brain dead, they cannot wrap their heads around what  a burger joint is.

Reminder all you..

A BURGER JOINT IS A PLACE YOU GO TO AND GET A GOOD TASTING BURGER, FRIES AND DRINK.

 That is all, not very complicated.

Just like in the 1950's, If it sucks you go to a different one.

Thu, 05/21/2015 - 13:29 | 6118046 Chuck Knoblauch
Chuck Knoblauch's picture

Its valuation has nothing to do with its product stupid.

Thu, 05/21/2015 - 13:44 | 6118119 MASTER OF UNIVERSE
MASTER OF UNIVERSE's picture

"Burger joint" is a fancy term for _Choke n' Pukes_ which is what they really are when one factors in all that grease, and transfat. The concept of 'good tasting' is not applicable due to the fillers added to hamburger meat during the food processing stage. China reported 'saw dust' in their McDonalds 'burgers' this past winter. Recall of those 'burgers' was issued, and McDonalds Public Relations went into overdrive to recoup losses. Frankly, if you ate a tasteless faux burger filled with 'saw dust' to add filler, and make moar profit, you would not claim 'taste' was a logical reason to eat at McDonalds in China. If all competition is using the same beef-to-saw dust mixture at fast food outlets all along the strip, you will eat what they have, and probably like it if you are hungry enough. Industry experts claim that the taste factor is mere 'salt' and 'sugar' by definition.

Thu, 05/21/2015 - 13:38 | 6118098 silverer
silverer's picture

I don't think you even have to put up the buildings or sell anything anymore.  Just tell them that you are going to do whatever, give the business a catchy name, and watch the stock take off!

Thu, 05/21/2015 - 17:01 | 6119036 cordial savage
cordial savage's picture

Etsy?

Thu, 05/21/2015 - 13:42 | 6118111 Bam_Man
Bam_Man's picture

Their shakes are clearly "bubblicious".

Thu, 05/21/2015 - 13:44 | 6118118 HandyCrapper
HandyCrapper's picture

Can I have a biker shootout with that order?

Thu, 05/21/2015 - 14:12 | 6118244 Freddie
Freddie's picture

And a side order of a false flag.

Waco needs a biker in the wheel chair pushed by Gene Rosen who gets his legs blown off (pretend only).

https://www.youtube.com/watch?v=3A8JDqHhUD4

Thu, 05/21/2015 - 13:51 | 6118155 buzzy_the_pirate_dog
buzzy_the_pirate_dog's picture

Full retard market

Thu, 05/21/2015 - 13:56 | 6118183 all-priced-in
all-priced-in's picture

If you shake it more than once

 

You are playing with it.

 

 

 

Thu, 05/21/2015 - 14:20 | 6118307 farmboy
farmboy's picture

Shake should do a buy out on MCD and see the share price of the new entity soar 6 times. That is the new normal.

after that deliver burgers by drone merge with AMZN and triple again.

Thu, 05/21/2015 - 14:49 | 6118410 laomei
laomei's picture

edit, my bad... was thinking of another place... this place is trash

Thu, 05/21/2015 - 14:43 | 6118430 SirBarksAlot
SirBarksAlot's picture

This is the innovation that made America #1.  I get what everyone is saying. 

But there was a family from my town that ran a tasty-freeze type walk-up that was only open about 6 months out of the year and the entire family lived on the incoome from that one location.

I had to wait for somebody outside a snow cone stand in Houston one time.  This snow cone stand was outside the basketball court and the local middle school.  It had a line for hours.  I sat there and watched getting rich, selling frozen water and sugar for $1 a pop.  It's the kind of business that lets poor people rise up.

Thu, 05/21/2015 - 14:51 | 6118470 Mike Honcho
Mike Honcho's picture

Did they have the proper licenses, health code score posted, posted caloric intake, 50 ft from a fire hydrant, not obstructing foot traffic, thermometers in the cold bins, sanitation options, healthcare?

Thu, 05/21/2015 - 14:46 | 6118445 Crisnach
Crisnach's picture

Pronosticos matematicos acciones EuroStoxx50

http://www.aseperfi.com/net/aatricnl/inftricmlsx5e.htm

Thu, 05/21/2015 - 14:49 | 6118464 Vinz Klortho
Vinz Klortho's picture

How could this possibly be?  Hmm......

Let's see, the alleged "purpose" of an IPO is usually to obtain capital for expansion, acquisitions, and general corporate purposes.  I know, it's really going to go for hookers, blow and booze, but bear with me.

The ratio shown as such a big deal looks like a red herring to me.

The valuation from the IPO makes the numerator big, while the immaturity of the company makes the denominator small, because they haven't used the IPO money to expand the number of stores yet.

So the "value/store" is artificially large.

If the post IPO valuation was $1, and they had no stores at all, the valuation per store would be infinite.  Like a computer dividing by zero, this would be pathological, or as George Carlin would say "a sign of a dangerous mental condition".

But I'm sure this is intuitively obvious to all the propeller heads around here.

Vinz

Thu, 05/21/2015 - 15:18 | 6118615 shovelhead
shovelhead's picture

There's always a spoil-sport.

Thu, 05/21/2015 - 17:51 | 6119185 SmedleyButlersGhost
SmedleyButlersGhost's picture

Let me know how that works out for you

Thu, 05/21/2015 - 14:57 | 6118504 silentboom
silentboom's picture

"I cannot help but raise a dissenting voice to statements that we are living in a fool’s paradise, and that prosperity in this country must necessarily diminish and recede in the near future."

- E. H. H. Simmons, President, New York Stock Exchange, January 12, 1928

Thu, 05/21/2015 - 15:08 | 6118568 Government need...
Government needs you to pay taxes's picture

IF Shake Shack is ONLY located in high-price cities where each restaurant can do >20% take-out biz and turn tables rapidly, the valuation may be justified.  The chart isn't an answer, but rather the starting point for insight.

Thu, 05/21/2015 - 15:18 | 6118613 Farmer Joe in B...
Farmer Joe in Brooklyn's picture

Fair point....

...but $50mln?!?!

That may be just a tad of a stretch...

Thu, 05/21/2015 - 16:16 | 6118874 q99x2
q99x2's picture

Chicken is ok.

Thu, 05/21/2015 - 17:25 | 6119107 spdrdr
spdrdr's picture

Tastes like chicken?

Thu, 05/21/2015 - 16:41 | 6118957 JenkinsLane
JenkinsLane's picture

Seems sustainable.

Thu, 05/21/2015 - 20:34 | 6119600 flyingcaveman
flyingcaveman's picture

Meh, I've got artisanal belly buttonlint infused tater chip crumbs that's worth more than that.

Fri, 05/22/2015 - 09:38 | 6121154 CaptOveur
CaptOveur's picture

It's actually worse than Zerohedge is saying. Only half the of locations are company stores. There is over $100M of market cap. per company owned store!!!

Fri, 05/22/2015 - 15:16 | 6122519 Hope Copy
Hope Copy's picture

wait until the bird flu hits...

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