Katie Fogertey: Yes. So on scaling digital, I think bringing back a little bit of – the history of our digital journey, starting in 2019, if you go back to that level. We had a very low digital mix as a company. And with everything that happened with COVID, we accelerated a lot of investments on that side, drove a pretty healthy digital mix, which was really critical for the company during times when guests were not going to the dining rooms as much. But as we’ve seen more of that return to normal, return to in Shack experience, that really aided by Kiosks as well. It really has changed the pace of investment needed to support this business. So kind of going from nothing to the great platforms that we have today required a level of commitment.
And now where we are today is on making sure that we are being very disciplined with how we’re supporting that and also still investing for our growth. So if you look at kind of what we’ve done with Kiosk and the retrofit program on that side and how we’re investing more there on upsell capabilities and better software and a better experience for that guest. We’re doing that in a way that is more cost efficient and will scale over time. I think it’s important to note too, that digital businesses require some level of upkeep, and that’s just something that’s going know as we are a digital leader in the space, that’s just something that’s going to be part of our CapEx, and we’re working on strategies and executing on strategies to be more efficient on that side.
Operator: Our next question comes from Jim Sanderson with Northcoast Research. Please go ahead.
Jim Sanderson: Hey, congratulations on a great quarter. Just wanted to talk a little bit more about pricing. I think a lot of your competitors have taken their menu prices up to 3%, 4% this quarter. Just wondering how you’re looking at pricing, if you have room to take that up further in the quarter or into 2024 as you start getting more visibility on inflation. Thank you.
Randy Garutti: Yes. Thanks, Jim. We’ve definitely been – we’ve been cautious for the history of the company. Obviously, we’re rolling off a high single digit from last year. We wanted to be cautious, so we took about 1%, just a small price increase in end of October. And I think we’re looking at it now to say, where do some of these inflationary pressures go? We continue to see increases in our fries, and beef, obviously, is the biggest part of the basket that we’re looking at. And we’ll continue to look at price as a lever that we may need to take. We feel good about the current value scores, but like anything, I mean, I think everyone, whether it’s every restaurant retail, you see a lot of cautiousness in the consumer, and we just want to be careful there.
We want to make sure we’re building this company not just for this next quarter, but for very long-term. And we want to make sure we’re looking at all of our channels and where pricing might go there. And I think we’ll take another look at that probably in the first quarter, but we’re not guiding yet at this time whether and how we will take anything. We’re rolling kind of a low single digit right now for the next six months or so, and we’ll keep an eye on that as we go. But we’ll be looking at 2024 and taking price where we need to.
Jim Sanderson: All right, and just a quick follow up question. You mentioned a movie promotion and the overlap in trade areas. Do you have a sense of how many Shake Shack’s in the U.S. overlap with trade areas where that movie will be shown? Just a ballpark.
Randy Garutti: I know it’s funny. I don’t have a number on that. We’ve got a lot that are actually in – some of the core Shacks that are in some of these great shopping lifestyle centers adjacent to movie theaters. We’ve seen – there were various pops over the summer with Barbie and some of the other strong movies that happened and drove some sales. And we do see a correlation in some of our Shacks. I’m sorry I don’t have the number, but I’m going to just roughly guess it’s probably around 10% or so that are pretty close to having some kind of impact there.
Katie Fogertey: Yes. And we’re going to be doing a lot of cool activations close to – I’m not going to give an exact number on this side, but there’s about over 50 Shacks. They’re going to have some really unique exciting activations that are troll specific, vinyl takeovers, lots of exciting things going on around the Shack. We’ve strategically placed – picked some of these just due to their proximity to two movie theaters. And there’s even going to be – as Randy alluded to in the script. There’s even going to be a few of them that are getting kind of this extra plus up with glitter bars for kids, coloring stations, photo booths. It’s going to be a really fun way to engage with our guests around this exciting movie.
Operator: Our next question comes from Jeff Farmer with Gordon Haskett. Please go ahead.
Jeff Farmer: Thank you. So for the 21 drive-through operation or drive-throughs you have in operation, I realize a handful of those have only been in operation a few months here. But can you touch on the common themes of those drive-throughs that have outperformed or underperformed expectations in the early going?
Randy Garutti: Yes, you bet. Thank you. And look, we’ve shared some of these targets. I would say on the outperform, like anything, like any Shack, it’s always going to be about the location, right? There are some Shacks where we got it better than we did at others. Certain Shacks where we would say, you know what, we probably could have put a Shack there. We probably could have gone to a higher traffic location or a better way to get in and out of that location. So I think our best ones are the ones where we’re seeing the best high traffic zones aligned with high brand awareness areas where Shake Shack kind of has strength. And I would say we’ve still got a lot to learn in our operation. We are kind of scaling that whole operation down slightly.
Not just for cost to build, because what we’ve learned is how many seats we really need, how many seats we need outside, what the vibe should be. And we think we can continue to build a drive-through that’s really distinct and exciting in the industry. But take down the size and cost of it in the kind of 2025 models. If you look at this coming year, what we’re excited about for the next batch of drive-throughs, we’re going to start to do it in what has traditionally been some of our stronger more coastal markets. There will be some Shack drive-throughs open on the East Coast, New Jersey, Long Island, looking at some on the West Coast in California. So we feel really good about the opportunities there to keep learning. And we’re investing in this, and we like it and it should be a part of our future growth, but we still got a lot to learn and improve upon.
