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Why Shake Shack's supply chain is stronger than ever

Editor's note: Beating the Supply Chain Blues is an ongoing series that features information about specific brands' supply chains. If your restaurant brand is interested in being featured, email editor@fastcasual.com

June 4, 2019

"Stand For Something Good," has been Shake Shack's vision statement since it launched as a hotdog cart 15 years ago in NYC, and it's a principle applied to all areas of its business operations, including the supply chain. For example, it sources ingredients from like-minded ranchers, farmers and food purveyors who use premium ingredients — 100% all-natural proteins with no hormones or antibiotics, humanely raised and source verified — according to the chain's annual report released Monday.

"We received an 'A' grading from the NRDC (The Natural Resources Defense Council) this year in their Chain Reaction Report for sourcing beef raised without any antibiotics, being one of only two burger chains to have done so without the routine use of antibiotics," it said.

Shake Shack, which also uses only cage-free eggs, elevated its mission even further this year by setting a goal of eliminating plastic straws and high-fructose corn syrup by 2019. It's also trying to build more relationships with local suppliers and ranchers throughout the country.

"We have a regional strategy for ground beef production to ensure that we are always serving freshly ground and never frozen beef at our domestic Shacks," according to the report.

Initially, and around the time of its IPO, Shake Shack's beef production was focused in New York City, but the chain has been adding butchers across the country as it expands its footprint. It also has a limited number of suppliers for its other major ingredients, including beef patties, chicken, potato buns, custard, Portobello mushrooms and cheese sauce.

In fiscal 2018, Shake Shack purchased all its ground beef patties from eight suppliers, with approximately 56% of its ground beef patties from one supplier, according to the report. Chicken breast, 'Shroom Burgers and potato buns each come from one supplier, while its custard base is sourced from three suppliers, The crinkle cut fries from two sources, and ShackSauce comes from two suppliers, with approximately 88% of ShackSauce supplied by one supplier, according to the report.

"We have developed a reliable supply chain and continue to focus on identifying alternative sources to avoid any possible interruptions of service and product," the report said.

Distribution

The chain has one broadline distributor to provide virtually all its food distribution services in the United States. About 84% of the core food and beverage ingredients and 100% of its paper goods and chemicals — collectively representing approximately 49% of its purchases — were processed through that distributor for delivery to each unit. Shake Shack also uses 19 affiliated distribution centers to supply its domestic company-operated shacks.

"Suppliers must meet certain criteria and strict quality control standards in the production and delivery of our food and other products," the report said. "We regularly evaluate our broadline distributor to ensure that the products we purchase conform to our standards and that the prices they offer are competitive."

Food safety and quality assurance

Food safety is a top priority, according the annual report, which said the chain has rigorous quality assurance and food safety protocols in place throughout the supply chain. It includes keeping a comprehensive supplier and ingredient selection process and maintaining a limited list of approved suppliers.

"We thoroughly review the results of suppliers' internal and external quality audits, insurance coverage and track record on an ongoing basis," the report said. "We have a food safety site inspection process and periodically perform supplier site visits, as well as mock food recalls. We have developed and implemented training and operating standards related to the food preparation, cleanliness and safety in the Shacks.

It also has a quality assurance team to ensure food safety across all domestic company-operated shacks as well as employing an external third-party to conduct additional audits on a quarterly basis.

Cover photo: iStock.