Shake Shack Inc. soared in its debut on the New York Stock Exchange after raising $105 million in an initial public offering, bolstered by investor demand for more upscale fast food.
Shares of the burger chain more than doubled to $45.90 at the close in New York, giving it a market value of $1.6 billion. Shake Shack sold 5 million shares for $21 apiece in the IPO, according to a statement Thursday, after offering them for $17 to $19 each.
The strong IPO is an indication of shifting attitudes toward fast food, particularly among younger diners, Chief Executive Officer Randy Garutti said. Shake Shack’s debut comes two days after a CEO change at McDonald’s Corp., which is mired in its worst U.S. sales slump in more than a decade.
“My kids will grow up in a generation of people who isn’t going to see fast food the way its been seen over the last few decades and those people generally want to go to a place like Shake Shack,” Garutti said in an interview with Bloomberg Television’s Betty Liu.
The company, owned by restaurateur Danny Meyer, raised its IPO price range from $14 to $16 earlier this week. The stock trades under the symbol SHAK.
Shake Shack’s road to stock-market darling began modestly. It opened in 2001 as a kiosk to help support the restoration of Manhattan’s Madison Square Park. The first official Shake Shack was born three years later, and it wasn’t until 2008 that the company started expanding. It now has 63 stores from Chicago to Dubai, which sell burgers, fries and frozen custard.
Shake Shack plans to open 10 new company-operated stores each year in the U.S. starting in 2015. Part of its proceeds will be used toward expansion and renovating existing stores.
Additionally, Shake Shack also plans to use the money to make a payment to Meyer and early backers such as Leonard Green & Partners LP, as well as to repay debt.
Meyer, 56, is credited with founding some of New York’s most prestigious eateries.
Born and raised in St. Louis, he serves as chairman of Shake Shack. His firm, Union Square Hospitality Group LLC, also operates a catering business and hospitality-consulting services.
The company is offering a dual-class share structure, with the Class A stock issued in the IPO representing 44.5 percent of the economic stake and 14.1 percent of voting power.
Current stockholders will own, through Class A stock, 55.5 percent of economic interest and 17.6 percent of voting. The Class B shares held by those investors will account for the remaining 68.3 percent of voting power.