Shake Shack will raise prices again in 2021 to fight inflation

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Shake Shack is preparing to hike prices this year more than it usually does in an effort to fend off inflation and protect its bottom line.

The New York-based burger chain’s chief financial office Katherine Fogertey said on a conference call with analysts last week to discuss the company’s second-quarter earnings report that customers can expect to pay as much as 3% to 3.5% more for their food.

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The price hike is planned for the fourth quarter of the year, Fogertey said, and will touch across a combination of various price tiers and digital pricing initiatives.

The planned price hikes are "higher than the approximately 2 percent menu price [increase] we have historically taken at the end of most calendar years, and we’ll be evaluating the need for further price increases that might go into effect in 2022, depending on how the cost landscape evolves through the rest of the year."

Shake Shack has already raised prices three times in the past year, according to Eat This, Not That. In December, it hiked prices by 2%. In February, the company raised delivery prices through third-party delivery services by 5%, and then another 10% in the spring.

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The move comes as supply-chain hiccups, shortages and other costs ripple throughout the economy, squeezing companies’ abilities to eke out a profit. Along with higher costs of goods, companies, particularly restaurants, now have to pay their workers more in order to attract experienced employees.

Fogertey added on the call that "we expect wage inflation in the second half of 2021 to be in the high single-digit range."

Several analysts on the call questioned why Shake Shack isn’t raising prices higher to improve the company’s profit margins even more.

Shake Shack’s CEO Randy Garutti said the company didn’t want to "go too far too fast."

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"We take our time and we do the right thing. We do not know yet whether inflationary pressures will be transitory, how long they will last, and there is just no reason to take too much at a time when there’s a lot of uncertainty in the world," he said.

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