Analysis of Shake Shack Development Trend and the Influencing Factors

Shake Shack has been one of the fastest-growing food chains since its establishment. It is characterized by fresh and simple burgers but of high quality. In recent years, Shake Shack has also become increasingly popular in China as it slowly ventures into the Chinese market. Thus, this paper attempts to analyze the future trend direction of Shake Shack. The methods include the average cost of capital and discounted cash flow models, key financial metrics, and consumer feedback. The data is from EDGAR that provides balance sheets in recent years. The results of the study suggest that shares of Shake Shack are overvalued, and their profits may be trending downwards in the future. However, its profits may rise slightly regarding customer preferences and reactions. Since Shake Shack focuses on the quality of their products, it has attracted tons of people who care about their health as the health-conscious community grows. In addition, this paper uses Big Mac Index to estimates the exchange rate between Renminbi and U.S. dollar by means of a regression model, and then this paper predicts the price directions of Shake Shack in both China and the U.S. The results show that the price in China might be lowered and the price in the U.S. is likely to increase.