Shake Shack CEO Talks Business Model, Breakfast

Shares of Shake Shack Inc SHAK soared after its 2015 initial public offering but are now down by around 25 percent since the company's first day of trading. Shake Shack is only beginning to see signs of success in new markets — such as California, Texas and Chicago — Randy Garutti, Shake Shack CEO said as a guest on CNBC's "Squawk Box" segment Friday. In fact, Shake Shack remains "such a small company" and should be viewed as a "public startup" with just 75 company-owned restaurant locations in the country.

Breakfast

Corporate Model

Shake Shack CEO Comments At Piper Jaffray Conference Drive Shares Lower Analyst Says Long-Term Investors In Shake Shack Should Continue Buying Shares _______ Image Credit: By Mike Mozart from Funny YouTube, USA - Shake Shack, CC BY 2.0, via Wikimedia Commons

But the company is still in the very early stages of its long-term plan, which should bode well for investors.

"It's nothing when you compare to the potential that we have in the white space out there," he said.

Shake Shack has been offering breakfast menu options at its airport locations but recently launched a breakfast offering at its Madison Square Park location. The restaurant chain feels it can offer consumers something different with a bacon-egg-cheese sandwich in which the sausage patties are cooked in the same way as burgers — not to mention with some "killer" coffee.

"We like it as a business but it isn't our main focus," he added.

Many of the restaurant chains are moving toward an asset-light model in which franchise opportunities are preferred over corporate-owned locations. This model is a major focus of its international segment in countries like Japan, Korea and the U.K., in which the company lets its partners "inspire" the global brand.

But in the U.S., this isn't the case at all.

"In this country, we love our returns and we want to own every one of them," he concluded.

Related Links: