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Shake Shack expected to file for IPO

Shake Shack Inc. is going public and may be worth as much as $1 billion – not bad considering New York restaurateur Danny Meyer started the joint as a public service.

Founded more than a decade ago to help support the restoration of Manhattan’s Madison Square Park, Shake Shack was an instant success, drawing long lines of urbanites attracted by Meyer’s modern spin on a roadside burger stand. Today, Shake Shack has more than 63 outlets in 30-plus cities from London to Dubai. It’s also profitable, with sales of nearly $84 million in the 39 weeks through Sept. 24, the filing shows.

The company, which will list early next year on the New York Stock Exchange (ticker: SHAK), is aiming for a $1 billion valuation in the initial public offering, people familiar with the matter said in September.

Meyer, 56, is credited with founding some of New York’s most prestigious eateries, including Gramercy Tavern, Eleven Madison Park, and Union Square Cafe, which he opened three decades ago. Born and raised in St. Louis, he serves as chairman of Shake Shack and his Union Square Hospitality Group LLC also operates a catering business and hospitality consulting services.

Shake Shack started as a hot-dog cart that later became a permanent kiosk and neighborhood fixture. Hungry urbanites have been known to hop the subway and travel 15 minutes to get their fix of $4.95 burgers and $5.15 shakes. Besides burgers and fries, the chain sells the frozen custard Meyer enjoyed as a boy in St. Louis.

Meyer’s timing was auspicious. Shake Shack joined a “better burger” boom as foodies from Los Angeles to New York began clamoring for food that tasted good and used sustainably raised ingredients. Much like many fast casual joints these days, Shake Shack advertises “100% all-natural Angus beef, vegetarian fed, humanely raised and source verified.”

In the U.S., Shake Shack plans to open 10 new company-operated stores each year starting in 2015, and expects it could grow from 31 company-operated stores to 450 over the long-term, it said in the filing. The company didn’t say how long it will take to reach that target.

In addition to making a payment to Meyer and early backers including Leonard Green Partners & Partners LP, the company plans to use its IPO proceeds to repay debt, open new Shake Shack restaurants and renovate existing ones.

JPMorgan Chase & Co. and Morgan Stanley are managing the offering. Because Shake Shack filed as an emerging-growth company under the Jumpstart Our Business Startups Act, or JOBS Act, it must wait at least 21 days before officially marketing its share sale.

Other restaurants chains have been tapping the public market this year, capitalizing on investors’ appetites for new and growth stocks. Pizza seller Papa Murphy’s Holdings Inc. raised $63.8 million after going public in May, while chicken chain El Pollo Loco Holdings Inc. has gained about 40 percent since its July IPO.