Shake Shack Just Announced Its Loyalty Program. It’s a Very Bad Sign

The company wants to keep customers engaged through technology, but it betrays a brutal truth about what loyalty really means.

EXPERT OPINION BY JASON ATEN, TECH COLUMNIST @JASONATEN

Shake Shack fast food restaurant, Madison Square Park, New York City, New York, USA

I suppose, on a long-enough time scale, every business comes to the conclusion that the thing it needs most is a customer loyalty program. On the one hand, it makes sense. If you incentivize customers to come back more often, they’ll presumably spend more money.

On the other hand, if the thing that keeps bringing customers back is some kind of gamified system of points and free stuff, is that really loyalty? At a minimum, it’s worth asking whether it’s actually good for business.

For example, Shake Shack didn’t start as a business. It started as a hot dog cart.

In 2001, Danny Meyer–already a leader in New York City’s fine dining scene–set up a simple hot dog cart in Madison Square Park as a side project. The hot dogs were so popular that the cart returned for two more summers.

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By 2004, Shake Shack officially opened as a permanent kiosk, built around what Meyer called a modern take on the American roadside burger stand. The first recipes were developed in the kitchen of Eleven Madison Park. The beef was the same beef served at Union Square Cafe. The philosophy was that hospitality shouldn’t be a fine dining luxury; it was a basic human offering. You could apply it anywhere—even a burger window in a park.

People lined up around the block–not because of a points system. The reason people connected with the brand is that the food was genuinely good and the experience felt like someone actually cared.

That’s the origin story Shake Shack has traded on for 20 years. It’s part of what people loved about the company and its brand. It’s also the thing the company just put at risk.

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