This Day On The Street
Continue to site
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Greenberg: Shake Shack Could Signal a Top for Restaurant IPOs

NEW YORK (Real Money) -- If Reuters is right and Shake Shack takes advantage of the seemingly unstoppable appetite among consumers and investors for new burger joints, I have a prediction: It will mark the top of the burger bubble, and if not burgers, certainly the market for restaurant IPOs.

Unless, of course, it doesn't, and instead it will open the floodgate for the last wave of restaurant IPO wannabes.

If and when it files, Shake Shack will be the latest in a string of restaurant IPOs, most of which have come out of the gate like a rocket, only to fade after the first turn.

Shake Shack, is without question, good. Its quality is good. Its concept, which is employee-centric, is very good. Management is considered really good. And most of all, its majority owner, Union Square Hospitality, run by legendary New York restaurant maven Danny Meyer, is considered exceptional.

We don't know, of course, what the numbers will be. But on the basis of steady lines in the few Shake Shacks I've either eaten in or passed, it's fair to say they're probably better than most. (I'd love to know the annual revenue of the unit in New York's Times Square, for example. Sure, it's Times Square, but that unit must be hitting some kind of record.)

Trouble is, in the land of burgers, the space has exploded in recent years, and not just Five Guys and Smashburger (always in the IPO rumor mill), but a lot of local chains that are sparking big followings, such as SoCal's Burger Lounge and The Habit (the latter of which is rumored to be eyeing an IPO). And they're going up against the likes of cult fave In-N-Out Burger on the West Coast (amid rumblings that quality has taken a spill) and the granddaddy of them all, McDonald's (MCD - Get Report) , which has not entered old age gracefully.

Lost in all of this is this, when it comes to burgers, is that they're all going up against local burger shops, which as a group are growing faster than the burger chains and all quick-serve restaurants.

According to the blog Burger Business, independent burger shops last year showed unit growth of 6% this year, compared with just 0.3% for the chains and 0.8% for all restaurants.

And that may explain why Five Guys, Smashburger and other burger chains, as hot as they may appear based on hype, aren't going public.

There may be something else: They just aren't doing that well.

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV

Markets

Chart of I:DJI
DOW 17,440.59 -127.94 -0.73%
S&P 500 2,067.64 -12.01 -0.58%
NASDAQ 5,039.7760 -48.8540 -0.96%

Our Tweets

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs