Danny Meyer has been impressing Manhattan’s notoriously choosy critics and foodies with his upscale eateries since 1985, when at age 27 he opened his legendary Union Square Cafe. But for all his high-brow accomplishments -- his Union Square Hospitality Group has 25 James Beard Awards to its name -- his take on greasy hamburgers is what has made him one of the wealthiest restaurateurs in the world, with a fortune nearing half a billion dollars thanks to the surging stock of his publicly traded Shake Shack chain.
Shake Shack has nearly tripled in value since pricing shares at $21 for its initial public offering in January. The chain, which started as a small hot dog cart in Madison Square Park in 2004, more than doubled its stock price on its first day of trading. After a mostly quiet February and March, Shake Shack shares inexplicably shot off again in April, increasing by 24% in the past week.
And no one is quite sure why.
“There’s really no explanation,” said Andy Barish, an analyst with Jefferies who covers the company. “Sometimes these stocks just kind of take on a life of their own.”
The restaurant IPO market has fared well overall in recent years, Barish noted. Companies like El Pollo Loco, Noodles & Co. and Zoe’s Kitchen all jumped out to fast starts after listing publicly.
And Shake Shack’s passionate fanbase, and large swath of retail investors, may precipitate some seemingly random volatility in its early months of trading.
“Obviously Shake Shack – and deservedly so – has a cult-like following among its consumers. You’re just going to get stock moves sometimes that are really based on nothing other than a little excitement or something. That’s just the way this company is going to trade for a while,” Barish said.
Danny Meyer can’t be complaining. His chain, now with more than 60 outposts (including licensees) worldwide from Las Vegas to Moscow and revenues of $119 million, is worth more than $2.2 billion after the recent stock swing. Meyer's 20% stake is worth $455 million after shares closed at $61.67 per share on Friday.
It’s unclear how much Meyer has reaped from the rest of his food empire -- his restaurant group also includes hot spots like Blue Smoke and Gramercy Tavern -- three decades after opening his first eatery, but he’s more than likely eclipsed a fortune of half a billion dollars.
