How Limited-Time Offers Can Help Shake Shack’s Top Line

Shake Shack stated that its limited-time offers, the ShackMeister Burger and Roadside Shack, have been “big drivers” for its ticket and traffic growth.

Adam Jones - Author

Dec. 11 2015, Updated 12:05 p.m. ET



It’s quite a usual practice for restaurants to run limited-time offers (or LTOs) to attract customers. Usually, the limited-time availability of an item on the menu creates a sense of “must try before it’s gone” in the minds of loyal as well as prospective customers.

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Shake Shack’s version

Shake Shack (SHAK) introduced the ShackMeister Burger and the Roadside Shack, both of which are LTOs. LTOs also create opportunities to shift customers to higher-priced items to generate a higher ticket per customer.

For example, the lowest-priced burger at SHAK’s Madison Square Park outlet, the ShackBurger, costs $5.19, whereas the Roadside Shack costs $6.19. The management stated that these LTOs have been “big drivers” for the company’s ticket and traffic growth. All of this leads to an increase in same-store sales growth, which drives the top line.

How LTOs can prove substantial

LTOs can have a huge impact on sales of a restaurant and can be the kicker to increase revenue for the company. Take for example the pumpkin spice latte, offered by Starbucks (SBUX), which has carved a new category in the beverage market.

According to the company, it has sold over 200 million Pumpkin Spice Lattes over a ten-year period since the product’s introduction in 2003. If we do the math, a price tag of around $4 per tall cup would mean $80 million in revenue in just one year.

You can access Starbucks through the Consumer Discretionary Select Sector SPDR ETF (XLY). XLY’s portfolio consists of holdings of 4% in McDonald’s (MCD), 3% in Starbucks, and 1.5% in Yum! Brands (YUM).


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