MKTG 5007 OLB - Major Group Assignment Report

Marketing Plan for Launching

In
Toronto, Canada

Report Prepared By:

Harmandeep Singh | Paramveer Singh | Devam Hirpara | Varnika Kochar | Savneet

Singh | Chandni Patel

N01192238 | N01191897 | N01165287 | N01131374 | N01196266 | N01186185

1
Table of Contents

Executive Summary................................................................................................ 3
Overview of the Company....................................................................................... 4
Market Overview..................................................................................................... 6
Situation Analysis.................................................................................................. 11
Product Offering.................................................................................................... 13
Channel Strategy................................................................................................... 15
Marketing Objective.............................................................................................. 19
Marketing Strategy................................................................................................ 19
Mission Statement................................................................................................. 21
Marketing Mix........................................................................................................ 23
Communications Mix............................................................................................. 24
Sales Promotions................................................................................................... 25
Financial Analysis.................................................................................................. 26
References........................................................................................................... 29

2
Executive Summary

This report highlights how the objective of entering Canada is going to be a

beneficial step for Shake Shack Inc. and how they can leverage upon their
identity and offerings to capture a sizeable part of the Canadian market
especially in the category of fats casual.

The report draws attention towards the current scenario in the fast food
market in Canada and how the major competitors for Shake Shack are
performing in the sense of the market share each of them acquire.

The report also throws light on what strategies Shake Shack can adopt to
emerge as a major player in the market and to present itself to the target
market as well as the potential targets. In the light of above mentioned, the
critical success factor for Shake Shack Inc. in the Canadian market would be
to leverage on the product line it has to offer as it differentiates them from
the competitors in a significant way. Furthermore the business conduct and
the ethical procedures followed by the company gives them a huge
advantage vis--vis how they can immediately make place in the hearts of
the Canadian consumers.

The proposed implementation is to expand in the Canadian market by

opening a store in the heart of downtown Toronto as it has high population
density making it easier for the brand to penetrate the market.

3
Overview of the Company
About Shake Shack

Shake Shack is a popular American fast casual restaurant chain which is

based in New York City. It was founded by Danny Meyer Chief Executive
Officer of the Union Square Hospitality Group (USHG). From, its humble
beginning in 2001 in a hot dog cart located in the heart of Madison Square
Park in New York City, Shake Shack today has grown to over 100 locations
and over half a dozen countries worldwide (SHAKE SHACK, 2016).

Shake Shack is known to serve the modern day Roadside burgers, the
menu apart from delicious burgers also include hot dogs, frozen custards,
shakes, in-house beer & wine and more (SHAKE SHACK, 2016).

History

It all began in 2000 when, New York City began the process of rebuilding of
Madison Square Park. Danny Meyer was involved in the creation of the
Madison Square Park Conservancy to redevelop it. The first project which the
redeveloped conservancy did was to host an art exhibit. To cater to the
visitors of the art exhibit, Danny set up a hot dog cart, which was operated
out of the kitchen of one of Danny's Union Square Hospitality Group (USHG)
operations, Eleven Madison. The idea of the cart was hugely successful and
it stayed in operation for over 3 years (SHAKE SHACK, 2016).

The next step came in 2004, when the city decided to invite for a kiosk-style
restaurant inside the park. Danny saw this as a great business opportunity
and thus began the first Shake Shack (SHAKE SHACK, 2016).

4
 Management Team
Danny Meyer, Chairman of the Board of Directors
Randy Garutti, Chief Executive Officer
Zach Koff, Vice President, Operations

(SHAKE SHACK, 2016)

Tag Line

Stand for something good

Product Line

Shake Shack product line includes the following products:

Burgers: 100% all natural angus beef, 100% all natural cage free
chicken

Flat Top Dogs: 100% all natural Vienna beef

Fries: Crinkle cut Yukon fries and cheese fries

Frozen Yogurt: Rich and dense frozen custard

Drinks: Shack-made lemonade, fresh brewed iced tea, Fifty/Fifty (Half

lemonade-Half Iced tea), in-house beer wine

Dog Food: Shake Shack has a special menu which includes biscuits
and creams

(SHAKE SHACK, 2016) (Kramer, 2010)

5
Market Overview

Our research and study concludes that Tim Hortons and McDonalds currently have
a major share of the Canadian Fast Food Market in Canada. Tim Hortons leads all
charts with over 26.8% of market share in 2015. It is closely followed by McDonalds
with a market share of around 14.6%.

The next category of brands with a significant share are Subway with 6.8%, A&W
with 4.4% and KFC with 2.6%.

Tim Hortons had a yearly sale of 6,667.20 (CAD Million) in 2015. McDonalds
recoded the second highest sales in terms of CAD Million in Canada in 2015.
Its sales were almost half of the leader Tim Hortons with sales of 3,627.10
(CAD Million). This shows us the huge lead Tim Hortons enjoys when it comes
to sales in Canada.

Reports suggest that Canadians spent almost 8398.1 (CAD Million) in 2015
on Burger fast food chains in Canada. 1064.0 (CAD Million) was also spent
the same year on independent burger fast food joints in Canada

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 Current Market Share of Fast Food Chains in Canada

S. Brand 2010 2011 2012 2013 2014 2015

No
1 Tim - - - - 26.50 26.80
Hortons
2 McDonal 15.50 15.10 15.00 15.10 14.60 14.60
d's
3 Subway 6.20 6.30 6.40 6.60 6.80 6.80
4 A&W 3.90 3.80 3.90 4.00 4.10 4.40
5 KFC 3.30 2.80 2.80 2.70 2.60 2.60
6 Wendy's - 2.50 2.50 2.40 2.40 2.30
7 Burger - - - - 1.40 1.40
King
8 Harvey's 0.90 0.80 0.80 0.80 0.80 0.80

7
Canada Current Market Share of Fast Food Chains in Canada (In Percentage)
30

25

20

15

10

2010 2011 2012 2013 2014 2015

(Passport GMID)

Yearly sales of popular fast food chains (In CAD MN)

S.N Brand 2010 2011 2012 2013 2014 2015

o
1 Tim - - - 6,339. - 6,667.
Hortons 40 20
2 McDonal 3,153.6 3,242. 3,324. 3,463. 3,502. 3,627.
d's 0 00 90 40 90 10
3 Subway 1,262.8 1,352. 1,420. 1,518. 1,626. 1,684.
0 20 50 70 90 60
4 A&W 804.70 823.90 867.7 913.30 985.6 1,081.
0 0 80
5 KFC 669.10 604.70 613.7 613.30 621.4 637.5
0 0 0
6 Wendy's - 539.40 551.0 558.10 571.9 583.7
0 0 0
7 Burger - - - - 340.1 341.6
King 0 0

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 8 Harvey's 184.70 179.90 179.2 178.80 182.2 190.8
0 0 0

Yearly Sales (In CAD MN)

8000
7000
6000
5000
4000
3000
2000
1000
0

2010 2011 2012 2013 2014 2015

(Passport GMID)

Average spending on American fast food in Canada

Sales In Fast Food By Category (In CAD Millions)

CATEGOR 2010 2011 2012 2013 2014 2015
Y
Asian 599.4 644.5 667.3 702.3 750.0 773.9
Fast
Food
Bakery 8057.2 8721.0 9139.1 9573.7 9949.0 10335.0
Product
Fast
Food
Independ 863.6 912.6 949.4 961.6 987.9 993.9
ent
Bakery
Burger 6758.9 7045.9 7281.7 7569.4 7980.9 8398.1
Fast
Food

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Independ 924.3 979.7 1000.2 1015.8 1046.7 1064.0
ent
Burger
Chicken 988.0 951.4 955.2 941.7 923.5 935.9
Fast
Food
Convenie 874.2 894.9 886.6 903.4 932.7 982.7
nce
Store
Fast
Food
Asian 599.4 644.5 667.3 702.3 750.0 773.9
Fast
Food
Bakery 8057.2 8721.0 9139.1 9573.7 9949.0 10335.0
Product
Fast
Food
Independ 863.6 912.6 949.4 961.6 987.9 993.9
ent
Bakery

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 SALES IN FAST FOOD BY CATEGORY (in CAD Millions)

12000

10000

8000

6000

4000

2000

0
2010 2011 2012 2013 2014 2015

Asian Fast Food Bakery Product Fast Food Independent Bakery

Burger Fast Food Independent Burger Chicken Fast Food
Convenience Store Fast Food Asian Fast Food Bakery Product Fast Food
Independent Bakery

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Situation Analysis
SWOT Analysis
Strengths
Brand awareness and
recognition
Trendsetter in the casual
dining category
Excellent customer service
Fresh ingredients and food
quality of products
Environment friendly
brand image
Opportunities
Offer more healthier
products
Investing more in
marketing
Leveraging the existing
social media presence
Expanding to developing
countries like India and
China.
Weakness
Higher prices
Lack of outlets
Lack of outlets leads to long
lines and consumer
complaints
Associated with fast food
industry
Lack of higher marketing
budgets
Threats
Growing competition in the
fast casual category
Increase in commodities
pricing gets passed on to the
consumers
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PEST Analysis
Political
Change in the government
of US
Rapid increase in
international trade
agreements
Developing public health
policies
Support from government
for globalization
Stability in political
environment in major
markets
Economical
Increase for the
importance of sustainable
business strategies
Growth in trade
agreements
Growth of economy in
developing markets
Stable US economy
Social
Change in the lifestyle of
people
Increasing trends for health
consciousness
Growth in the awareness of
animal rights
Growth in consumer diversity
Technological
Boost in the sales by the use
of mobile applications
An opportunity of increasing
R&D
Growth in the availability of
technology
Increase in the operational
efficiency with new
technological advances
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Product Offering

The Shake Shack Product Line includes the following:

Burgers

Shake Shack is known world over for serving 100% all-natural Angus beef
patties. No hormones and no antibiotics ever. Shake Shack has a
proprietary Shack blend which is freshly ground.

For the Vegetarians

'Shroom Burger - A Crisp-fried Portobello mushroom filled with melted

Muenster and cheddar cheeses, topped with lettuce, tomato, ShackSauce.

Flat Top Dogs:

This is all where it began from. 100% all natural Vienna beef, these
scrumptious hot dogs are hard to ignore.

Fries

Crinkle cut Yukon fries. Add hot melting cheese to it to experience the
signature Shake Shack cheese fries

Frozen Yogurt

The rich and dense frozen custard is made fresh daily. ! Made with zero
artificial flavours the fudge sauce and caramel sauce have zero shelf-life
lengtheners.

Some of the favourites are:

o Shack Attack

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 o Wall-nut Street (BPC)

o Jellys Last Donut (TD)

o Brooklyn Pie oh My (Brooklyn Shacks)

Drinks

Shack-made lemonade, fresh brewed iced tea, Fifty/Fifty (Half lemonade-Half

Iced tea), in-house beer and wine

Dog Food

Select Shake Shack outlets have a special menu for mans best friends which
includes biscuits and creams

Pooch-ini - ShackBurger dog biscuits, peanut butter sauce and vanilla

custard. Includes dairy, sugar and nut products.

Bag O' Bones - 5 ShackBurger dog biscuits

(SHAKE SHACK, 2016)

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A sample menu from the Madison Square Park New York location.

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Service Offering

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As quoted by Rob Brunner at the Fast Company, Shake Shacks customer
service is what makes it stand out as compared to its competitors in the
industry.
Since is first began operations in 2004, Shake Shack has kept its focus more
on quality of the food being served and less on marketing. It has slowly and
steadily changed the perceptions associated with traditional fast food with its
excellent customer service.

Shake Shack food preparation model has changed the opinions of the
consumer, that fast food has to be served quickly and has to be precooked,
as is the case with many current chains now. Consumers are willing of wait a
bit more for their food if they know the food being served comes with
excellent quality of ingredients and customer service (LUTZ, 2015)

About the Dcor

Shake Shack outlets are designed to look edgy. They have flat wooden tables
and modern interiors. They offer one of the best dining experience in the
category what has now come to be known as fast casual (DUA, 2015).

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19
 (Picture Courtesy: Joan Voight, Campaign US, May 19, 2015)

Channel Strategy

Shake Shack today has over 100 locations worldwide. It is known for selling
fresh, locally sourced food in sustainably operated kitchens. It prides itself on
serving products made from all natural ingredients.

Shake Shack has been successfully running an international operation

sourcing ingredients from local farmers and artisans bakers. A major reason
of the same is that it comes its menu small so that the companys sourcing
team can be actively and regularly engaged with local suppliers. The menu
consists of 55 to 60 core ingredients items. (Milbergs, 2015)

As a part of its current channel strategy Shake Shack only uses 5 different
suppliers in the USA for its beef. Out of those 5, one supplier alone
contributes 88% ground beef patties used in Shake Shack outlets in the
world. The custard and potato bun are sourced from one single supplier each
(Kell, 2015).

Suppliers and Shake Shack

Vendors Outlets Consumers

Recent Update

In order to efficiently manage its channel strategy, Shake Shack has licensed
ArrowStream, Inc., for its OnDemand software to help it better manage food
spend, inventory, limited-time-offer (LTO) tracking, auditing, and contract
management with its suppliers and distributors. (QSR Magazine, September,
2016)

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Marketing Objective

The main objective for shake shack to enter the Canadian market is
expansion. Currently the company is serving in United States, Japan, Middle
East, Russia, Turkey, United Kingdom and South Korea. But is yet to enter the
immediate neighbor market of the place where it originated.

Furthermore, statistics show that fast food has a good market in Canada.
Shake Shack being a high-quality brand with offerings that are different from
the competitors who are currently present in Canadian market, Shake Shack
has good chances of acquiring of a big part of that ever-growing fast casual
category.

Another objective is to cater to the Canadian market is that many Canadians

who have visited United States know about Shake Shack and like it as well,
but do not have the means to quench that craving. This step would mark a
stepping stone to make the entire Canadian market familiar with what Shake
Shack is about and why it is so good.

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Marketing Strategy

The key marketing strategy would be to capitalize on the fact that Shake
Shack offers products that are all-natural and no artificial ingredients are
used, given how the Canadian market is becoming health conscious with
each passing day. Also, the famous curly fries which is one of the best-sellers
can be used for effective marketing tool as it is something different which no
competitor has to offer. Plus the uniqueness of the menu which also has a
dog food segment can prove to be a great strategy to attract dog owners
even if they are not fast food lovers themselves.

Shake Shack has been amongst the top 10 fastest growing chains in America
with 100 branches across the world in 2016. It is extensively known for
premium quality burgers and delicious custards. The most interesting aspect
about Shake Shacks marketing is that they spend very little on advertising
campaigns. They never had to spend huge amounts to develop brands
strength through advertising. The company has achieved substantial
followers on various social media networks, gathering their positive
appraisals from their customers.

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Shake Shack does No Traditional Marketing, but has a very solid presence
on social media which speaks to its significance amongst the millennials.
Shake Shacks social media game is on fleek. According to analyst, Shake
Shacks overall success is through its expertise in social media. We can
follow the same concept at the time of launching shake Shack in Canada as
people in Canada are active on social media.

Shake shacks marketing strategies are mainly online related to their social
media and networks, online reviews and feedbacks and marketing though
emails. Their attractive website having fascinating images of food is very
appealing to the visitors. The design and the green color of website
represents healthiness and a clean maintainable environment. In addition, it
website also has customer winning gifts, coupons for students, keep updated
about the latest events etc. All these features attract people to the website.
These all factors could be used while getting Shake Shack to Canada.

With the constant use of brand graphic, design, images, content and E-
commerce on its website, shake Shack strengthens its marketing message. It
is very important to have customers that are satisfied with our food products
and services, who will further be our advocates, recommending their family
and friends to try them. With a strong social media strategy, Shake Shack

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can enter Canada by finding the right audience, convert them into loyal
customers and further get referrals. Thinking of social media as word of
mouth-line will help us to expand our business.

Shake Shacks major marketing strategies which can be used while launching
in Canada:

Social media: Shake Shack manages its social media on various

networks such as Facebook, Twitter, Instagram, Google plus, YouTube
and Pinterest. It has large number of followers on various channels and
engaged in terms of comments, likes and retweets. Shake Shack has
achieved great success through social media.

Online reviews: Reviewing customers feedback matters to every

business, because it is very important to know what customers feel
about their products or service. Shake Shack manages its reviews on
Yelp, Trip Advisor, Google plus and foursquare. Every location of Shake
Shack has its own review channel which are spread across every
locations and states. Shake Shack has reviews that are positive and
negative as well but, on average it has incredible positive ratings with
good comments.

Email marketing: Shake Shack has three major sections of their email
marketing status:

1. The opt-in form they use

2. Email delivery to their subscribers

3. Email personalization for their customers

Mission Statement
We stand for something good in everything we do.

That is the mission statement Shake Shack holds for itself as it believes in
having good standards not just of the quality of the food they provide but
also of their behaviors and actions which they perform as a part of the
community.

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Shake Shack takes pride in using good ingredients in their products like
100% all natural Angus and Vienna beef and 100% all natural cage-free
chicken and not using any artificial ingredients for their fries or frozen
custards.

Shake Shack strongly believes in doing good for the environment as they
recycle all bottles and plastics and makes sure no recyclable material ends
up in landfill. There are many other ways in which the company helps the
environment like their 1% of all the Shack2O bottles supports the
Waterkeeper Alliance which focuses on cleanup of water resources around
the globe, the merchandise sold is made from organic cotton and recycled
polyester, the chocolate bars are sold in recycled heavyweight paper
wrapper, some of the shacks use solar roofs for electricity generation and
many other initiatives.

Shake Shack also achieves their mission of being good members of the
community by donating 5% of the sales to a local charity partner and they
also have a Shack Gives Back program where they indulge in community
service regarding animal welfare and education. They donate more than
2,000 hours a year to serve meals to the hungry, mentor kids in need, clean
up parks and much more. The company also supports the No Kids Hungry
campaign by providing incentives to those who donate for this cause.

(Stand For Something Good, 2016)

Shake Shack is doing a great job vis--vis achieving its vision. By providing
good quality of food and giving back and doing so much for the community
they are truly accomplishing what they say they stand for and believe in. In
the coming years, we can see them doing much more for the betterment of
the community and justifying their mission statement of Being Good in
everything they do.

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Marketing Mix

4 Ps of marketing for Shake

Shack
Product Place

Launch the first outlet on King

Never Pre-cooked -
St West and Spadina Avenue
The products sold at in the heart of Downtown
Shake Shack are always
A major intersection in heart
freshly made
of downtown
Variety in menu like
Area visited by young adults
Yogurt, Burgers, Shakes,
and millennials
Drinks for kids, Dessert.
Downtown Toronto has high
Option to customize each
population density making it
product
easier for the brand to
Menu includes in house penetrate the market
wine and beer

A special menu for dogs

Promotion Price

Use outdoor media like First Shake Shack to offer

billboards, to be placed
across key locations in
Toronto
Social media channels like
Facebook, Twitter and You
Tub
combo meals
Competitive pricing like of
other fast casual restaurants
in Toronto
Customised menu with a new
product targeting the

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 Offer introductory Canadian market
discounts to customers

Sales Promotion

Direct Selling

Communications Mix

Shake Shack as brand is known to spend little on advertising. As per reports,

its advertising costs for the year 2013 were about US $794,000 and for 2012
I was $564,000. (Maureen Morrison, January 30, 2015)

For its launch in Toronto, Canada, following mediums will be used to

communicate the information of the launch.

Advertising

Advertising sets the foundation for communicating the brand to the target
audience in a new market. It helps us to convey our message to the
consumer. It is the starting point of creating a long term relationship with the
consumers.

The advertising techniques to be employed in Toronto are as follows:

Print Media (boards and billboards)

Electronic Media
Social Media Campaigns

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Sales Promotions
Introducing special limited time promotions to create a buzz in the market.

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Financial Analysis

Market Analysis

Our research and study concludes that the major risk for Shake Shack when
entering the Canadian market is the existing competition. There are existing
chains who already have a major share in this market.

The chains include Tim Hortons, Mc Donalds and Subway who have
constantly had a major market share in Canada for the years 2014 and 2015.

S. Brand 2010 2011 2012 2013 2014 2015

No
1 - - - - 26.50 26.80

2 15.50 15.10 15.00 15.10 14.60 14.60

3 6.20 6.30 6.40 6.60 6.80 6.80

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Contingency Plan

The means to mitigate this problem is the unique selling proposition that
Shake shack has. First being the classic items in their menu like the curly
cheese fries and 100% Angus beef patties. The other unique selling point for
them is the availability of in house beer and wine on their menu.

Another important factor which makes Shake Shack different from its
competitors is the menu it has for our furry friends as well.

Shake Shack is a fast casual restaurant chain and offers a better

environment for its customers to enjoy their food.

Sales and Financial Result Analysis

Shake Shacks financial results for the year 2015 and fiscal year ended on
December 31, 2015 are as follows:

Financial Results (2015)

Total revenue increased 60.8% to $190.6 million.
Shack sales increased 63.5% to $183.2 million.
Net Income was $2.9 Million.
(SHAKE SHACK, 2016)
Shake Shacks financial results for the fourth quarter and fiscal year ended
Dec 30, 2015 are as follows:

Financial Results (Fourth Quarter)

Total Revenue increased 46.8% to $51.1 Million (US)
Shack Sales increased 49.2% to $49.3 Million (US)
Net income was $1.2 million
(SHAKE SHACK, 2016)

Financial results for the Second quarter ended June 29, 2016 (13 weeks)

Financial Results (Second Quarter, 2016)

Total Revenue increased 37.2% to $66.5 Million (US)
Shack Sales increased 38.3% to $64.4 Million (US)
Net Income was $3.3 Million.

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(SHAKE SHACK, 2016)

From the report of the past sales we can observe a decline in the total
revenue, the reason behind the decline is the large amount of Shake Shack
shares which were available in the market as a part of its secondary offering.
Shake Shack founder and CEO Danny Meyer was expected to reduced his lot
of 1.3 Million shares to 30,000 shares, also Los Angeles based Private Equity
Firm Leonard Green & Partners filed to sell up to 5 million shares.

But in the year 2016 we can observe an increase in sales by quite a

significant amount. Total Revenue increased from $51.1 Million to $66.5
Million with sales increasing from $49.3 Million to $64.4 Million before the
completion of the fiscal year.

Market Share Forecast

From the observation of the past data we can surely forecast an increase in
sales and total revenue for Shake Shack. The forecast is as follows:

We can forecast an increase in Total revenue of at least $2 million

dollars for a new store in Toronto.
We can surely assume the increment from $66.5 Million in 2016 by
June to go as high as about $69.8 Million in their introductory year.

31
References

DUA, T. (2015, February 26). How Shake Shack won over millennials. Retrieved from
digiday.com: http://digiday.com/brands/shake-shack-hit-among-millennials/

Kell, J. (2015, MAY 14). Why Shake Shack Will Never Be McDonald's. Retrieved from
http://fortune.com/: http://fortune.com/2015/05/14/shake-shack-mcdonalds/

Kramer, K. (2010, october 15). Shake Shack Founder Expands His Empire. Retrieved
from cnbc.com: http://www.cnbc.com/id/39679233

LUTZ, A. (2015, june 22). Shake Shack's biggest advantage has nothing to do with
the food. Retrieved from businessinsider.com:
http://www.businessinsider.com/shake-shacks-customer-service-policy-2015-6

Milbergs, M. S. (2015, MAY 22). Shake Shack's supply chain guru on sourcing better
burgers. Retrieved from greenbiz.com:
https://www.greenbiz.com/article/shake-shacks-supply-chain-guru-sourcing-
better-burgers

SHAKE SHACK. (2016). Retrieved from www.shakeshack.com:

https://www.shakeshack.com/food-and-drink

SHAKE SHACK. (2016). SHAKE SHACK. Retrieved from investor.shakeshack.com:

http://investor.shakeshack.com/investors-overview/news/press-release-
details/2016/Shake-Shack-Announces-Second-Quarter-2016-Financial-
Results/default.aspx

www.shakeshack.com. (n.d.).

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