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Shake Shack is proving that Millennials’ propensity to share pictures of their burgers on Instagram can affect the stock market. If this sounds a bit over dramatic, let me explain.
On Tuesday, Wall Street analysts began coverage of fast-casual Shake Shack, nearly a month after the burger chain’s promising IPO in late January. Buried within Goldman Sachs’s discussion of the brand is one tidbit that shows just how important social media has become in analyzing a company.
Goldman Sachs says that, similar to Chipotle, Shake Shack has a “unique resonance with Millennials,” in part due to a strong social-media presence. The burger chain has racked up 155,000 followers on Instagram, in spite of only having 63 locations, half of which are in the U.S.
For comparison, McDonald’s has more followers — 491,000 — but also has way more locations — 36,000, of which more than 14,000 are in the U.S.
Using Goldman Sachs’s measure of followers by system sales (i.e. all outlets’ total sales figures) in North America, McDonald’s has 11 followers per systems sales, while Shake Shack has a stunning 1,808.
Using the same followers by system sales measurement, Goldman additionally found that Shack Shake is more successful than competitors on Vine — though Taco Bell is a close second, as both are near the 20 followers per North American system sales mark.
The firm said Shake Shack has additionally driven relevance with Millennials by sourcing “real food” at competitive prices, as well as partnering with local brands and charities. The burger chain needs to work on building recognition and approval outside of the core market of New York City, as the brand is still in early stages of growth in the U.S. and internationally, according to Goldman.
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