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Slow growth was part of Shake Shack's business formation

Georgia business owners may have heard that trendy burger purveyor Shake Shack is planning to open only a modest number of new establishments across the United States. Growth is a central factor in nearly every business plan, and ordinarily, business formation anticipates rapid growth once off the ground. However, Shake Shack is in no hurry to expand and, instead, decided to take its time and build slowly.

Currently, the chain has 63 locations. Approximately half of them are spread across the country, including some here in Georgia, and the rest are overseas. The company recently announced that it plans to open only 10 stores per year for the foreseeable future. By comparison, other burger chains such as Five Guys opened hundreds of stores for three years between 2010 and 2013. Over the course of the last three years, fast food giant McDonald's opened an average of 84 locations across the United States each year.

The competition for burger lovers in the United States may provide the reason why Shake Shack is choosing to proceed slowly in this country while expanding outside of it. Staying power is often a factor that can make or break a business. By limiting the number of store openings, Shake Shack seems to be more concerned with longevity instead of fast profits.

Growing a business can be a tricky proposition. Market saturation of one type of product can often dilute profits and result in lower profits in the long run. When considering growth during business formation, today's economy and concerns about competition bear careful consideration. Before taking steps to create and build a new business, it may be beneficial to thoroughly explore all of the business and legal issues that could affect the success of the venture.

Source: Bloomberg Business, "Shake Shack's Modest Growth Plan", Venessa Wong, Jan. 30, 2015

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