Shake Shack CEO Vows Not To Be ‘Lowest Price Point Product Out There’ As Stock Struggles To Recover

The burger chain's shares have declined 20% since its quarterly report last week, where same-store sales growth missed estimates.

At a time when restaurant chains are attracting consumers with lower-priced and value menu items, Shake Shack has a slightly different take.

Rob Lynch, CEO of the burger chain, told CNBC that the company would not lower its prices but instead focus on driving further efficiencies in the supply chain.

"We've built so much productivity over the last year, our operating margins have gone from right around 20% up to 24%, almost 24% last quarter," Lynch told CNBC's Jim Cramer on Monday.

"We're right now working within our supply chain to find a lot more productivity, so we're able to mitigate that inflation with all the productivity."

Last week, Shake Shack reported second-quarter revenue and earnings above estimates. Same-store sales rose at a rate of 1.8%, which was less than expected, likely causing shares to drop. 

SHAK stock is down 20% since Thursday, and 11% year-to-date.

Lynch said Shake Shack is "never going to be the lowest price point product out there," as its products cost more to make. Instead, the company is exploring alternative ways to deliver value, such as offering drinks for as low as a dollar through its app. 

He also highlighted new additions at select locations, including alcoholic options like boozy shakes, classic cocktails, and a full bar experience.

According to Lynch, Shake Shack no longer depends on pricing to drive growth and now sees traffic as a significant driver of "healthy, sustainable growth." The chain has pricing power if inflation skyrockets, he added.

On Stocktwits, the retail sentiment for the company was ‘bullish’ at the last reading.

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