Published 4:21 pm, Friday, January 30, 2015
NEW YORK, NY – JANUARY 30: A man takes a photo of a free Shake Shack hamburger he got outside the New York Stock Exchange (NYSE) during the burger company’s IPO on January 30, 2015 in New York City. Hamburger chain Shake Shack rose more than 130 percent in its trading debut on the NYSE Friday. Shares for the New York based burger chain opened at $ 47, and quickly climbed above $ 52 before dipping back to $ 48.77 for a 132 percent advance. (Photo by Spencer Platt/Getty Images) *** BESTPIX ***
Photo: Spencer Platt / Getty Images
(FILES) This December 30, 2014 file photo shows a general view of the restaurant Shake Shack in Washington, DC. US chain Shake Shack burgers more than doubled on the morning of January 30, 2015 for its introduction on the New York Stock Exchange. Shake Shack Inc. raised $ 105 million in its initial public offering, pricing the shares above an increased range amid strong investor demand for the restaurant chain. The stock started trading Friday, listed on the New York Stock Exchange under the symbol SHAK. AFP PHOTO/JIM WATSONJIM WATSON/AFP/Getty Images
Photo: JIM WATSON / AFP / Getty Images
Specialist John O’Hara, wears Shake Shack promotional hat, sunglasses and vest as he works at his post on the floor of the New York Stock Exchange Friday, Jan. 30, 2015. Shares of Shake Shack Inc. have more than doubled minutes after they debuted on the stock market Friday. (AP Photo/Richard Drew)
Photo: Richard Drew / Associated Press
Jeff Flug, President of Union Square Hospitality Group; Danny Meyer, Founder & CEO of Union Square Hospitality Group; and Randy Garutti, Shake Shack CEO, fourth left to right, celebrate as they ring the New York Stock Exchange opening bell, Friday, Jan. 30, 2015. Shares of Shake Shack Inc. have more than doubled minutes after they debuted on the stock market Friday.(AP Photo/Richard Drew)
Photo: Richard Drew / Associated Press
Danny Meyer, left, Founder and CEO of Union Square Hospitality Group, and Randy Garutti, second left, CEO of Shake Shack Inc., ring a ceremonial bell on the floor of the New York Stock Exchange, as their company’s IPO begins trading, Friday, Jan. 30, 2015. Shares of Shake Shack Inc. have more than doubled minutes after they debuted on the stock market Friday.(AP Photo/Richard Drew)
Photo: Richard Drew / Associated Press
Shake Shack Inc. soared in its debut on the New York Stock Exchange after raising $ 105 million in an initial public offering, bolstered by investor demand for more upscale fast food.
Shares of the burger chain more than doubled to close at $ 45.90, giving it a market value of $ 1.6 billion. Shake Shack sold 5 million shares for $ 21 apiece in the IPO, after offering them for $ 17 to $ 19 each.
The strong IPO is an indication of shifting attitudes toward fast food, particularly among younger diners, Chief Executive Officer Randy Garutti said.
"My kids will grow up in a generation of people who isn't going to see fast food the way it's been seen over the last few decades, and those people generally want to go to a place like Shake Shack," Garutti said on Bloomberg Television. "We've helped define that, and we're going to be out in front of that as we go."
The company, owned by restaurateur Danny Meyer, opened in 2001 as a kiosk to help support the restoration of Manhattan's Madison Square Park. The first official Shake Shack was born three years later, and it started expanding in 2008. It now has 63 stores selling burgers, fries and frozen custard from Chicago to Dubai.
Shake Shack plans to open 10 company-operated stores each year in the U.S. Part of the IPO proceeds will be used toward expansion and renovating stores. Additionally, Shake Shack plans to make a payment to Meyer and early backers such as Leonard Green & Partners LP, as well as to repay debt.
Shake Shack is profitable, though its global expansion has weighed on earnings. It posted $ 3.55 million in net income in the 39 weeks that ended Sept. 24, down 20 percent from the same period of 2013.
Revenue jumped 41 percent in that time, boosted by people turning away from traditional fast food. Meyer refers to Shake Shack's category as fine-casual dining.
"What we're seeing is a seismic shift in people's expectations of food today," Garutti said.
Leslie Picker and Craig Giammona are Bloomberg writers. E-mail: lpicker2@bloomberg.net, cgiammona@bloomberg.net
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