Shake Shack Inc (NYSE:SHAK) Sending Shock Waves To McDonald’s Corporation (NYSE:MCD)

On its debut, Shake Shack Inc (NYSE:SHAK) made it clear that it certainly has a promising future. The shares of the burger chain skyrocketed by nearly 119%, closing at $45.90, $24.90 up from the initial public offering price of $21.

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It marks a good time for the operator of 63 restaurants, which is likely to upset giant McDonald’s Corporation (NYSE:MCD) further. The spike in Shake Shack Inc (NYSE:SHAK) shares came just days after McDonald’s Corporation (NYSE:MCD)‘s CEO announced his resignation. The falling sales of McDonald’s and growing popularity of Shake Shack point out to the shift in the prosperity among the restaurant chain operators.

Who Should Worry?

Shake Shack Inc (NYSE:SHAK) is a burger chain that offers fresh and made-to-order items to customers. Though the operation of the company could not be compared to the giant businesses like McDonald’s but the identity of the company is growing. Also, investors are confident about the prospects of the company as more and more consumers are willing to spend more for quality of food and animal welfare aspect.

The growth of such fast-casual restaurants is prominent during 2008 to 2013, when the numbers of these restaurants grew tenfold, according to research firm Technomic Inc. Such fast-casual restaurants grew by 5.2% to 49,098 in 2013, percentage higher than the normal fast-food burger posints.

Mind-Catching Concept

The peculiarity of fast-casual chains like Shake Shack Inc (NYSE:SHAK) is that they offer fast food using less of frozen or processed food. Also, these chain claims to use meat that come from producers, who follow stringent welfare practices and do not use antibiotics or hormones on animals. The concept has caught the craze of the young crowd, in between their 20s and 30s, amid the growing consciousness about the quality food.

For some analysts it appears that the investors are too excited about the company. Sikich LLP analyst, Christopher Grier said that Shake Shack Inc (NYSE:SHAK) has bright future prospects and it does not need to depend on the market share of McDonald’s for growth.

About the Author

Michael joined US Markets Daily in 2009 and is a national news reporter focusing on economic issues, data analysis and the financial health of state and local governments.

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