You won't see a value meal at Shake Shack anytime soon — it doesn't need one

The restaurant chain posted stronger-than-expected second-quarter earnings on Thursday, highlighting how diners are still dropping cash on fast food, even in today’s inflationary economy. Shares of Shake Shack climbed for most of the day, after the company said it expects annual sales to come in on the upper end of its earlier guidance.

Even as rivals pay up to push meal deals in front of consumers, Shake Shack’s chief executive officer Robert Lynch disagrees that the chain’s higher prices make it less competitive in the market.

“There has been much discussion about customers moving to a more value-oriented mindset and that the industry has started to wage value wars in a fight for transactions,” Lynch said. “In this environment, many believe that Shake Shack’s premium positioning is a liability. But to the contrary, I believe that is truly one of our strengths,” he added.

Lynch said Shake Shack has been nimble in deploying (and employing) strategic promotions to earn more than its own fair share of transactions. Its even gone as far as poaching a former Chik-Fil-A employee and TikTok influencer to promote a new menu item.

But even so, Lynch emphasized the need for Shake Shack to broaden its consumer base, which skews towards high-income consumers. He told investors during the earnings call that it’s not necessarily that low-income customers don’t want Shake Shack, but rather that it “becomes more of a special occasion.”

Lynch did not say the chain would lower its prices, but did say that to reach all consumers it would need to work on its speed of service and value perception.

“That was one of the big question marks, could we persevere through these value-oriented times,” Lynch said, adding that the last five months have shown the chain has— and that ultimately, value isn’t just about price, it’s about the quality guests are offered.

The New York-based chain, which is celebrating its 20th anniversary, surpassed Wall Street’s expectations. During the second quarter, Shake Shack generated revenue of $316 million, about 27 cents a share, reflecting a 50% earnings increase, according to FactSet.

Shake Shack, which once started as a single hotdog cart serving food in Madison Square $SQ Park, plans to open 40 new locations this year. It also hopes to get a handle on its drive-thrus, which aren’t up to par, according to Lynch.

“Today, our drive-thru times are exceedingly too long and we’re going to fix all of that,” he said.