Shake Shack to open cashless, kiosk-only location in New York City

Burgers and French fries from Shake Shack

Shake Shack
Burgers and French fries from Shake Shack

Shake Shack has a lot of questions about consumers and it’s hoping that its newest restaurant will provide some answers.

The burger chain, founded by restaurateur Danny Meyer, is opening its first-ever cashless kiosk, in New York this month. The “playground,” as CEO Randy Garutti calls it, is a place for the company to test out a variety of digital innovations and ways of connecting with its consumers.

Located in Astor Place, this Shake Shack won’t have a cashier’s counter. Instead, guests will use digital kiosks or their mobile phones to place orders. Manning these kiosks will be “hospitality champs,” Shake Shack employees who specialize in making customers’ time in the restaurant as seamless and enjoyable as possible.

Orders will go directly to the kitchen, which has been rearranged to “eliminate friction time,” Garutti told CNBC.

Eliminating “friction” is a big piece of this new Shack location. In addition to streamlining the back of house operation, the Astor Place Shake Shack will not accept cash. Garutti said many customers still pay with cash in its restaurants, but the company wants to see if removing that option will make the dining experience more seamless.

In addition, instead of the traditional Shake Shack buzzer, diners will receive a text from the restaurant letting them know when their food is ready. This way customers are no longer tethered to the restaurant while their food is being prepared, Garutti said.

The new Shack will have a similar dining room and waiting area as traditional Shacks, he said. The company was unable to provide renderings or photographs of the Astor Place location, which is currently under construction.

Shake Shack’s digital innovations are not out of character for Meyer. In 2001, he began integrating digital reservation service OpenTable into his restaurants. Garutti, who worked as a restaurant manager for Meyer at the time, said many employees were scared that by adding this technology they would be alienating their guests. But it had the opposite effect.

Garutti said the newest digital elements allow the kitchen staff to focus on the food and the front of house staff to focus on the customer.

“It’s really a guest-centric strategy,” he said. “We get the best people and the best hospitality. It’s not just about the hamburgers.”

In order to hire the best staff, Garutti said the company will be paying workers at this location a minimum of $15 an hour.

He said it’s likely that in the next 15 to 20 months that areas like New York, California and D.C., in which there are many Shake Shacks, will transition to a $15 minimum wage. Many of its locations already pay employees upwards of $13 per hour, with the aim of graduating workers to higher pay grades and positions within the company.

Adopting this payment policy in Astor Place will give the company a chance to work out the kinks before it rolls out a $15 minimum wage in these locations.

Other tests that Garutti expects this Shack location to tackle include delivery speed and delivery packaging. He said the company is working to cut down the time it takes to get food to the customer and how it is brought to them.

Many restaurants have begun revamping their delivery packages in an effort to make sure that their food arrives to the customer in the best possible condition. (Anyone who has ever ordered french fries, knows that they can get soggy from the condensation that gathers on the lid of the container.)

Garutti said company officials expect a few hiccups, but they are just excited to see what elements of this restaurant work best. In particular, he said the restaurant made sure to have a backup plan in case of internet malfunctions or Wi-Fi issues.

He said that Shake Shack plans to do “a lot of listening” at its Astor Place location to get a better sense of what customers like and what they want. These insights could be used in future Shack locations or to revamp older locations based on what each restaurant needs.

“It’s one size fits one,” he said.

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