Be Guest Centric: Shake Shack's Art of Merging Hospitality with Digital Integration

In this episode of The Digital Restaurant podcast, we're excited to share our conversation with Steph So, the Head of Digital at Shake Shack. With a rich background in e-commerce spanning across various industries, Steph brings a unique perspective to the fast casual dining scene. Shake Shack, a leader in innovation within the restaurant space, has been a trailblazer in integrating hospitality into the fast casual setting.

Steph discusses the brand's focus on creating an "enlightened experience" for guests, whether they're ordering from a kiosk, through the app, or in person. A remarkable 57% of Shake Shack's Q1 2023 sales were digital, a testament to the success of their digital strategy. Steph emphasizes the importance of removing friction from the digital experience, ensuring that it's intuitive and quick, yet still maintains a personal touch.

The conversation then delves into the concept of digital hospitality and the balancing act between automation and human interaction. Steph shares insights on how automation has enhanced the role of team members, allowing them to focus more on guest experiences rather than just transactional duties.

Another critical aspect discussed is the omnichannel approach of Shake Shack. Understanding that guests have different preferences, Shake Shack aims to provide a consistent, high-quality experience across all channels, whether it's in-store, via the app, or through delivery.

Loyalty and guest centricity are also key themes. Steph talks about Shake Shack’s approach to loyalty programs, focusing more on offering experiences rather than just discounts. She highlights the importance of personalizing guest interactions and how they use data to tailor experiences, driving both loyalty and frequency.

Finally, Steph touches on the backend operations, explaining how they integrate various digital ordering systems to maintain accuracy and efficiency. This insightful episode provides a comprehensive look at how Shake Shack is navigating the digital transformation in the restaurant industry, setting new standards for guest experiences in fast casual dining.

Transcript

Speaker 1: 0:00

We're here at Create this week and recording some very special podcasts for Nations Restaurant News. We're going to be interviewing eight different executives from restaurants and also from the Ambassador Community to explore different themes of each of the chapters of the path of digital maturity. So, hi everyone. We're joined today by Steph so, who's the head of digital over at Shake Shack. Steph has a rich e-commerce experience. That's not just from restaurants experience over at Ralph Lauren Shop, bob, estee Lauder and more. So, as we've often said, on the digital restaurant, you actually get to learn a lot from other industries. On retail, for sure, is definitely a great area, so we'll talk a bit about that. Shake Shack Steph is such a well-known brand. We always think of them as an innovator in our space, so we're really thrilled to have you on the show.

Speaker 2: 1:22

Thank you for joining us. Thanks for having me so fun Awesome. I think everyone has heard of Shake Shack, so it needs no introduction, but the founder, danny Meyer, and the entire Union Square Hospitality Group. They are so known for their attention to detail around hospitality, but Shake Shack is fast, casual. So how does Shake Shack bring hospitality life in that fast, casual setting?

Speaker 3: 1:45

We believe that hospitality can be in every interaction so you can be fast, casual and still be a hospitality company, which we really believe that we are.

Speaker 3: 1:53

There are not a lot of brands in the super high quality and yet affordable kind of zone and we believe that Shake Shack can be that. We are all about putting the guests first. We are all about creating an enlightened experience when you come and uplifted experience. Our team members are really trained to put that at the forefront. So, no matter what the guest is doing whether coming in and ordering from a kiosk or having pre-ordered on our app or our website and coming in to pick up our team members are really trained to create an uplifted experience. Oftentimes that means even having what we call a hospitality champ at the front of the house greeting you when you walk in, helping you through your kiosk transaction if you need it, or just bringing your food to your table and running food to the table when it's ready. So I think those are some of the kind of nods to hospitality that we really tried to have.

Speaker 1: 2:39

One of the things that stood out to me was around the level of digital sales, and astounding 57%, I believe, in Q1 of 2023 were digital, which I think in its own right is huge and very credible to the brand. But we also know that those that have kiosk have 75%, and I was talking to your CTO about that a few weeks ago and he was saying how kiosk is such an important part of your strategy. So how are you translating hospitality into a digital environment to get that level of sales? Because if you don't have hospitality, you're not getting anywhere close to that level, I guess I think hospitality and digital.

Speaker 3: 3:13

It could be very simple from the voice that we use in the copy. It doesn't have to be jazz, hands and animation and video and things that happen when you push certain buttons. I think that the best thing we can do is remove friction from the experience. So when you're on a kiosk, it should be very intuitive. It should be quick to build your order. We should remind you if there's anything that you may have needed to add that you didn't. Things like modifying your sandwich or adding extras like bacon or avocado should be very intuitive and quick. Those are the ways that I think, even if you have a digital experience in our restaurant, we also don't want it to be cold, heartless and without interaction with our team members. Oftentimes you'll put in a table number and then a team member will run that food to your table and ask you was there anything else? You need, and I think that to us, is giving our team member a higher value experience in exchange with the guest, rather than just being an order taker at the point of sale.

Speaker 1: 4:04

We've heard that actually mentioned a lot in reference to automation and how sometimes automation can enable the team member to give more time to the guest, and I think you just vocalize that in that exact way. How does that impact the employee experience? Is it making them feel like this is actually more fun now, as opposed to being part of a transaction? They're now part of the experience.

Speaker 3: 4:25

Yeah, I think most people get into a restaurant and have hospitality because they like people and they enjoy that energy in a restaurant and you don't really get that same energy when you're focused on getting an order correct behind a point-of-sale terminal. But you definitely. We hire folks who are naturally interested in helping the guests have a great day. So the goal should be you know, Danny Meyer had a really fun kind of statement really early in the days of Shake Shack where he said put me out of business with your generosity.

Speaker 3: 4:54

And so the challenge to the team member was do whatever it takes to help the guest have an awesome experience. And so that still is in our core, whether it's, you know, somebody needs a high chair at a table, or making sure the table is clean before the guest gets there, resetting the chairs. I think those are things that our hospitality really comes through, and also our team members actually enjoy much more than kind of the intimidating view of a line forming and you're at the POS and you're really quickly trying to take an order and get it done.

Speaker 2: 5:23

So early on in the adoption of kiosks in airlines. I'm sure you remember that back in the day you would go in to use the kiosk and there would often be someone standing there helping you figure out how to navigate it, how to use it. Have you had to do that inside Shake Shack to help the consumer understand how to use the kiosk number one and two, that it's actually better. I mean, you think now of your airline experience. If you go in and you have to talk to a human, you're a little bit disappointed. 100%. No.

Speaker 3: 5:51

We noticed. We did a little bit of wayfinding research. So our team, along with guest insights, we took, we watched 100 hours of video across all of our restaurants and what we noticed, first and foremost, is people will gravitate towards where the people are. So if a team member or four team members are standing behind points at the sale, no matter what happens on the kiosk there could be six of them open a guest will walk right to the point of sale. So we've done the same thing. We've asked team members please stand by the kiosk, welcome people in and have them have the experience they want.

Speaker 3: 6:22

I think what's interesting about kiosk is if you put a young person like my middle school son on a kiosk, he's having the best time. He's just kind of cruising around doing whatever oh, I didn't know they had this He'll spend as long as he needs. Those of us who are on a lunch break will order in about four seconds and we're out of there, and I think that's the beauty of having the guest really determine the pace of the experience. So it's not up to me as an order taker, it's actually it's up to you as the guest, how long you want to take with your order.

Speaker 1: 6:53

We reported on the digital restaurant a few weeks back about the Tilster study. That said, I think the number one benefit that guests saw about kiosks was the fact they were stressed. They didn't feel like there was someone behind them pressurizing them to use and I think that is again about thinking about the guest experience.

Speaker 3: 7:08

Yeah, I think it's fun when I observe guests. There's oftentimes, you know, there's the stigma that young people these days don't really like to talk to somebody. They want to have a fully digital experience. But we've actually seen older folks who come in and actually prefer the kiosk because they don't feel rushed and it's very visual. It's a very visual view of our menu. There's visual confirmation of what you've ordered. So I think there's something about that. There's a feedback mechanism built into kiosk that is sometimes harder to do when you know there's a high pressure situation and a team member is reading you back your order. It's almost like yes, yes, that seems right. Yeah, as opposed to really just checking and make sure you got what you wanted.

Speaker 2: 7:47

Funny. So guests are on the channel. You think of your own experience as a consumer. Sometimes you order in, sometimes you get takeout, sometimes you go to a restaurant and inside of the Shake Shack environment you probably have a guest. They might major in a certain channel. You know, every day at lunch they use the Kiosk, or certain folks who always use you for a weekend dinner, but they do order across channels. So how do you think about harmonizing those channels so that you're meeting the guest where they are, regardless of how they choose to engage with you?

Speaker 3: 8:25

I mean, first and foremost, our restaurants were built as community gathering places, so that is a huge tenant of who we are. We are never going to be a fully digital restaurant where you never, you know, interact with someone and you never eat in. So we're totally great with the idea that people major in different channels depending on their needs, and our goal is to give you the best quality experience and the an uplifting experience every time. So when people come into our restaurants, we really hope you stay. You know we've built them so that there are great seats, that the vibe is great, that the music's fun and it should be a good place to hang out. But we also totally get it that there are different use cases for needing to order delivery, in being stretched for time.

Speaker 3: 9:07

So our goal is that, no matter how you choose to experience Shake Shack, you should be getting the highest quality product, high quality food. So we package food differently when it goes for delivery than when it's being picked up. And we really believe that when you come into a restaurant, you should be in control of your time and your experience. So that's everything from the amount of time you take on a kiosk or if you're pre-ordered on the app or the website or, frankly, you can't make it into a restaurant, you're stuck on the couch. All good, we'll bring it to you. So our goal is to really be across channels in that way and what we've seen, to the point of your question, is the Omni Channel Guest is the most valuable. They tend to have actually majored in the In Shack experience, majoring on kiosk, but the best guest has our app and is using it, sometimes to pre-order and sometimes to get delivery.

Speaker 2: 9:53

And are all the different ordering channels? Are they harmonized so that if I'm a guest who uses one and I go to use the other one, it is equally intuitive and I know exactly what to do?

Speaker 3: 10:03

Yeah, our goal is parody across those experiences. It's very difficult because they are all on different platforms, yeah, but we're getting there because I think that we should never feel totally different. And back to the voice and the copy and the way you kind of use our channel. It should be the same. So you shouldn't feel that, oh, I like how the app works because I can always add bacon in this way.

Speaker 2: 10:23

It should really be a very similar, very similar, and then are you able to harmonize the data on the back end so that you can truly see that guest in a 360 way.

Speaker 3: 10:33

That is, I think, every restaurant's greatest challenge. We are getting better and better at that. So I think our goal one day will be for the guests to have, for us to have, stitched together all of the guest's data across every single transaction. I think we're on that journey. The more I know about the way the guest orders, the better I can serve offers or better I can customize your experience and I don't really believe in personalization the way that you know it doesn't have to say hi, meredith, when you go to the kiosk. I do want to make sure that we've started to give you the right offers based on you only order veggie. Then I want to make sure that when we're having a veggie promo or a new launch related to that item, that it's definitely in your app and you know it and you're aware. So it's kind of not that hyper personalization, but really just kind of honing in by category and making the experience more intuitive.

Speaker 1: 11:23

That's fascinating. We brought you in for this particular conversation around guest's intricacy and a lot of folks sometimes think that is just about loyalty and sometimes, in the past, the digital maturity we puts, yes, interest almost towards the back end because it's difficult. It's difficult, yes, but loyalty also comes in different ways. And I'm curious, phil, for shake-shake at least, how do you quantify what a loyal customer is? And then I'm curious so have you got any recommendations or tips out there for folks to think about how to get more signups to a loyalty program so you can understand, perhaps, who the customer is, even if they're not necessarily loyal? And Is there anything around increasing that frequency that you can share as well?

Speaker 3: 12:05

Yeah, we are loyal guests as the ones who've enrolled for an account with Shake Shack and have our app, and really what that means is we have this notification center within the app and if we know you and you're you're an account with us, in your notification center You'll get things like invitation to our regional events. We've just sponsored a 16 city pickleball tour, so if you're in a city where we're on tour with pickleball, we want you to know. Carl.

Speaker 1: 12:28

Oh well, I'm on. Yeah, yeah, yeah, yeah, yeah.

Speaker 3: 12:32

I mean it's all kinds of things like we have regional items that are only specific. If you are in our app and and you know that you know in Texas we have the Longhorn burger. We want you to make sure you get that. So I think that it's it's really about getting that. Enrollment is the loyalty guest and that we've seen increased frequency tremendously, because Everything that's in the app for you is super relevant to your experience and where you are, we.

Speaker 3: 12:55

There's a little bit of a trap around traditional like earn and burn loyalty programs. You know what we find is then the guest trend relationship becomes very transactional and you are discounting your most most loyal guests significantly and maybe you didn't have to. So I think we've been focused on targeted offers that are behavioral and you know, to your question about how do we get more people to enroll, we need people to know that if you enroll, you'll get these behavioral offers, you'll get the regional invites we might have you at the pickleball games. There's local music Happening in a lot of our restaurants and we want people to know. So I think those are some of the benefits really selling the experience, as opposed to selling on the discount, which works for a very short amount of time but doesn't necessarily lead to the lifetime value.

Speaker 2: 13:40

It's almost like an addiction to you, right? I think people become accustomed to getting that discount. Let me hear some discount, right, but as we've seen again and going to other verticals, just giving away Value in the form of a discount maybe isn't the thing that most consumers care about in my super I mean again of Airlines and hotels the things that we value most about those programs are access to better seats, access to better rooms, getting a little check out Exactly like it's a big one, maybe once every few years.

Speaker 2: 14:12

All you know, splurge and redeem some points, but it's not something I'm doing habitually, whereas every single time I check into the hotel room, being able to get a better room or being able to get that late check out, those things matter, and I think the restaurant industry is just learning those lessons, bringing people like you over from other verticals who've seen that happen in other places. There are so much better ways to reward your loyal guest than justice.

Speaker 3: 14:38

Yeah, at the end of the day, we're an experiential brand and we know that there's a higher price that comes with that. But a lot of the other brands I've worked with so you know luxury brands like a Ralph Lauren or an S Day lot or understand that People don't just come back for the clothes or the makeup and people don't just come back to shake shack for the food, even though I think the food's great. It's, it's the experience and how we make you feel, and so that is a lot more than a discount and it isn't going to be a discount that really retains that Guest. It's actually going to be much more of the other stuff and and kind of buying them into our ecosystem.

Speaker 3: 15:10

In a way that we have and we're lucky to have some pretty rabid fans who, you know, bring their dogs to our restaurant at Madison Square Park or have their wedding proposal at one of our restaurants, and we don't take for granted that a lot of those really fun experiences that we get to share the joy of a lot of that. And so we try to go the extra mile, like, if it's someone's birthday, we will start to do the thing where we close off part of the restaurant for you, make sure you have your space. So I think those are kind of the ways that we should be able to do that. So I think those are kind of the ways that we should be doing a little bit more, because it's a little bit more experiential.

Speaker 1: 15:44

Earlier you mentioned about the the different ways in which you'll use the loyalty sign up as a way to communicate with guests at different times. But it's also one of the reasons why some folks are nervous about sign up for a loyalty program because I'm just going to get my emails like I'm suddenly going to double my email account because of all these loyalty programs Back in the day. Of course, it's like there's only a certain amount of cards I can have my wife or purse. How do you manage that balance so that you maintain that loyal following but also don't, you know, kill them with so many different messages?

Speaker 3: 16:11

So I think it's funny. Shake Shack is the least amount of emails I've sent in a weekly basis of any brand I've ever worked for, which I remember the weekly send of emails. When I was at other brands and we had many, many categories or many, many brands underneath the umbrella, we were sending multiple of emails a day. And we really really try. We use Brazes, our CRM, so we have a real understanding of like engagement open. You know, if you're not opening on this channel, then we're going to switch to push and we're going to use push as a primary channel and Braze has really been excellent for us in automating that. So you shouldn't be getting pushes, pushes, pushes, emails, emails, emails, unless you're opening both, in which case great. But we should be optimizing based on the channel that the guest is responding and we should really stop in the channel that they're not.

Speaker 3: 16:59

It sounds really obvious. But we monitor engagement stat as much as we, as much as we look at enrollments. Because the churn you know you can have these vanity metrics where it looks like your program is growing massively every year, but if your churn is equal to that, then it's really not. You're not building a loyal base and so we really do think very carefully about what we email versus what we push and kind of the volume we're using in each of those and how big of a microphone is required for the message that we're trying to share. Notification center and our app has been a really exciting move to that, because sometimes there's just a little note that we want you to have. There's a buy one, get one free shake every afternoon. We want that to be ever present, but I don't want to message that every day.

Speaker 1: 17:42

That's annoying, and just to double click on that a little further have you noticed differences between email and SMS, and what learnings have you got from that?

Speaker 3: 17:50

Yeah, very much. I think it's actually different by device, it's different by user, it's different by cohort and, frankly, we don't have real demographic data to say this age group or this type of guest. We actually think it is very customer centric. Who interacts with us via email versus via app? Our web is meant to mimic the experience of the app. So if you're not an enrolled app user and you primarily go from email to website, we want that experience to be super seamless and kind of the same. So it works mobile first on your phone, and it's not a monkey ordering experience. So we have many guests that kind of follow that path versus are enrolled in the app. But back to your question about those experiences knitting together. My goal is to have parity across all of them. I'd love for you to be enrolled on all of our channels so that that experience is more tailored to your behavior, regardless of the channel you're on.

Speaker 2: 18:43

Totally makes sense, especially then on the backend Right you can make all the beautiful customer experiences on the front end that you want. How do you knit that together on the back end so that the team is able to execute in store, so that the fulfillment experience is maybe different, appropriately so, for each channel, but equally excellent across channels?

Speaker 3: 19:05

You know that was, I think, trial by fire than many restaurants had to go through during COVID. Or it was like, how do you ensure order accuracy when every single thing that you're sending out of your restaurant is in a box that is closed, right? So it's hard to really know that I got everything right. So we have a digital operations team within Shake Shack and their goal is really taking a look at everything that's being ordered on digital channels and then tailoring the way that shows up on our KDS so that there are fewer mistakes.

Speaker 3: 19:32

And this is, I think, some of the fun that goes into really tweaking your operations. Like, when someone takes tomato off of a Shack burger, does tomato show up like right under Shack burger? How do we ensure that that's not on there, right? So we did a lot of fun, little tweaking and tests with one of our restaurants. We ran a bunch of different tests to how to increase order accuracy without really screwing with too much, but really making sure that the way that it comes across to a team member is super intuitive, so that our accuracy score going out just keeps ticking up. That's awesome, which you know. There's nothing worse than if you order something very specifically and you don't get it True. You know to your point, the front end can only do so much.

Speaker 2: 20:11

I always am shocked by the third party response to complaints of just giving a credit back, because you're speaking my husband's language with the tomato example. He's allergic to tomatoes, so he orders something with no tomato and it comes with tomato on it and then they give him a credit back. He's actually still hungry. Yeah, he doesn't call it anything. The reason that we're ordering food and that we order it as a prepared meal at that moment is because we want to eat it at that moment, and it really doesn't do anything to fix it.

Speaker 3: 20:41

One of the biggest things we launched was proactive chat on our website. So you know, just as important as guest experiences, service recovery and for us, service recovery requires a person. So you know this is an enlightened hospitality tenant that we never wanna just send you to an automated experience where you just get your money back. Honestly, a lot of times people just wanna be heard, and so we have hospitality reps who are trained to chat directly with guests. If you have a bad experience, we really do wanna hear it.

Speaker 3: 21:11

Yes, we'll issue a comp at the end of the day to make sure that you come back, and the comp is usually commensurate to whatever happened. You know, if it was a sandwich that went wrong, we'll always try to give you a little bit more, but I think it's much more hearing the guest and our hospitality team does a lot of follow-up. So it's things like man, we're constantly messing up that tomato or you know it could be. Even we heard that there was one restaurant that was really packaging things incorrectly and delivery orders were coming in cold. We really need to know that and that's kind of things that we can have a feedback loop back to the restaurant and make sure we fix.

Speaker 2: 21:43

What are the patterns and you're able to see that in the data Exactly. Help the team.

Speaker 3: 21:47

So for us, that's why hospitality for us is a team of real, live breathing not AI human beings who are really hearing and, you know, equally incentivized to make the guest have a great day.

Speaker 1: 22:00

Let's finish up with a question One. We get a lot and we featured the reference of CRM and you mentioned Braze earlier and CDP in this chapter. How do you differentiate between the two? Does a restaurant need both a CRM and a CDP? How do you guys approach it?

Speaker 3: 22:15

I think, yes, you need both. I think a CRM is really about marketing automation, choosing the right channels, optimizing your message. For us, a CDP is about segmentation and thinking about the cohorts of guests. I go back to kind of my consulting days, a little bit of a data nerd, and I really love thinking about not everybody is gonna have the same frequency across your restaurant and we, I believe we have a wide range. You have the turbo user, like my family in New York. We're like once a week or is that Shake Shack? And then you have some folks who are about once a month and their experience and the offer I give has to be different.

Speaker 3: 22:51

So we look at a CDP as an opportunity to score those cohorts, understand those segments and then figure out how to migrate. You. You're not gonna go from once a month to once a week. There are steps in between and so we don't need to make everybody into that cohort of guests, but we need each cohort to be its most valuable and most profitable and most productive. So that's kind of how we think about a CDP is really understanding these segments, breaking them apart and then allowing ourselves to say, hey, what's our permission to either discount or what dollars do we have to kind of cultivate this segment and what does this segment respond to the most? So I think that's a little bit different than how we use Braze, which is really they have great tools, they have great messaging tools and that's a little bit more about optimizing the outgoing message.

Speaker 2: 23:36

I love that it's so much e-commerce mindset, thinking through those different cohorts of consumers and how you incentivize them and what you're spending and what you're getting in return. It's such a different way of thinking and from recent five years ago, when we had no idea who our guests actually were, who was walking in the door, we maybe would do some surveys, we maybe had some hunches, but we didn't know. Based on data, we had these people doing these things and they are this valuable to the restaurant and therefore we can afford to give them X, y, z.

Speaker 3: 24:12

That's incredible. No, I think that's been. And then we have our top, top tier where sometimes we invite you to sit down dinner with the chef from Pujol. I think we understand the very top and we understand the mass of our guests, but I think our next horizon is really getting down to that cohorting, so we can really understand what's the experience we should be driving for each of them.

Speaker 2: 24:34

I love it. Well, thank you so much, chef, for joining us. This has been very enlightening, very, very nice to meet you both Appreciate it chef.

Speaker 3: 24:41

Thank you.

Speaker 1: 24:42

And good luck as you continue on the digital journey with ShakeShop, because it sounds like there's exciting things ahead for you guys.

Speaker 3: 24:47

Lots to do. Thanks so much.

Speaker 1: 24:51

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