Shake Shack (SHAK) is betting more on the future of Penn Station, New York City's major transit hub, rather than on its grimy, hard to navigate present state.
The upstart better burger chain opens its doors to a new location inside Penn Station on Saturday in the hopes of giving hurried commuters the taste of a real hamburger and shake, as opposed to what is served up at the McDonald's (MCD) a few doors away. For Shake Shack, the brand spanking new location is likely a win win.
First, some 650,000 people go through Penn Station each day, more than the daily number of passengers for all three main New York City area airports combined. That sizable number of people coming from New Jersey, Long Island and elsewhere will put the Shake Shack name front and center with groups that have unlikely ever tried the company's food before. It will obviously help put a ton of cash in the register, too.
"Penn Station is pretty busy, it's the right place to put a Shake Shack for sure -- there are just prime spots in New York City where people are, and Penn Station is a natural community corridor," Shake Shack's Senior VP of Operations Zach Koff told TheStreet in an interview (video below).
While the daily traffic today in Penn Station is a nice aspect to the story for Shake Shack, the opening is more about getting out in front of the hub's long overdue modernization. After all, it's unlikely Shake Shack would take its premium burger brand to Penn Station without efforts by government officials to upgrade the facility's amenities and general appearance. As it stands, the current condition of Penn Station borders on a New York City embarrassment, while adjacent stores consist of struggling Sears Holdings (SHLD) owned discounter Kmart to cheap fast-food slinging Subway.
Shake Shack's Penn Station location
Earlier this year, New York Governor Andrew Cuomo unveiled plans for a complete overhaul of Penn Station, including a new 255,000 square foot train hall that will accommodate both Amtrak and Long Island Rail Road commuters. It will also feature 700,000 square feet of retail and office space. Cuomo is targeting Penn Station's remodeling to be done by 2020, though at the pace that construction typically moves in the Big Apple that's probably ambitious.
The upgrade is definitely needed not only for appearance purposes, but also to handle a likely surge in traffic to New York City. By 2040, it's estimated that 210,000 more commuters will come into New York City, many through through Penn Station, according to The Regional Plan Association.
Said Koff, "Look, everybody has got a lease that expires at some point -- I think the retail corridor will have to step up its game in what will be an enhanced experience."
Shake Shack will have little time to bask in the glory of opening its Penn Station spot weeks before the peak holiday rush, which will surely rake in the cash for the store. The company is targeting 21 to 22 new restaurant openings in the U.S. next year, a faster pace than the 19 expected to open this year. About 10 international openings are expected for next year, consistent to the number unveiled in 2016.
And yes, mobile ordering will soon arrive to the location, says Koff, and it will also stay open late on nights when there are games and concerts letting out of Madison Square Garden.