Shake Shack

The problem

In 2001, Danny Meyer’s restaurant group was helping to revive Madison Square Park in New York. It needed food in the park, but nobody knew whether a permanent outlet there would pay.

What they did

Randy Garutti, Meyer’s director of operations, set up a hot dog cart. It was run out of the kitchen of Eleven Madison Park, a restaurant the group already owned. The cart ran for nearly three summers. When the city opened bids for a permanent kiosk, the group already knew the demand was real.

What changed

The first Shake Shack kiosk opened in July 2004 with a wider menu of burgers, fries and shakes. Summer queues there can run past an hour. The company went public in 2015 and now runs more than 400 locations worldwide.

What you can learn

• Test demand before you sign a lease. A pop-up stall, a weekend counter or a delivery-only menu tells you what sells for a small fraction of a fit-out budget.
• Borrow a kitchen you already have. The cart used an existing kitchen, so the test cost almost nothing in equipment.
• Let the test set the menu. The permanent menu grew from what customers queued for, not from a long launch list.

Opening your first outlet? The questions we work through before any lease is signed are on our restaurant startup consulting page.