Shake?s Slows Growth, Still Shoots for 600

Fayetteville-based Shake’s Frozen Custard has slowed its ambitious growth plans, for now, but the company is still shooting to have 600 stores open by January 2008.

Shake’s currently has 45 custard locations open with another 67 “under development,” said Corey Osborne, CEO of Shake’s. Under development, in Shake’s corporate lingo, means in the long-term planning stages.

When we last wrote about Shake’s in September, the company had 41 stores open with 53 under development. Osborne first mentioned the 600 number to the Business Journal in March of 2003.

“We’ve slowed it to the point of being able to perfect it,” Osborne said. “We’re not going to grow for growth’s sake … We’re not going to jeopardize the brand. Initially, we grew and had strong success with it, but we want to be very careful with who we pick as a franchisee.”

Of the 45 open units, two — in Fayetteville and Joplin, Mo. — are owned by the company. The rest are owned by franchisees. Osborne said Shake’s plans to open company-owned stores in Dallas and Fort Smith this fall.

The Fayetteville Shake’s brought in $598,672 in sales last year, according to city tax records. That’s a 30 percent increase over sales of $461,658 in 2002. Osborne said the sales increase was due largely to the new prototype store the company built at 2835 N. College Ave. In 2002, Shake’s was operating out of a converted Rally’s hamburger restaurant at the same location.

“It’s a more efficient building,” Osborne said of the prototype, which has two drive-through lanes and two walk-up windows but no inside seating. “It’s much more attractive.”

Osborne said last year’s sales figures for the Fayetteville Shake’s are comparable to those of the company’s other “mature stores that are placed appropriately in a market.”

Osborne said same-store sales at the Fayetteville location are up 32 percent through April of this year. Systemwide, same-store sales are up 11 percent so far this year, he said.

When asked how many of Shake’s 45 stores are unprofitable, Osborne said, “By and large, they’re profitable. We’re in some smaller markets that we shouldn’t be in, in hindsight … It’s difficult for me to put a number to that. I can’t tell you that there’s one store out there that’s not making money.”

Although some of his competitors may have more frozen custard stores, Osborne said, “Nobody sells more custard than us in the United States.”

Shake’s has stores in eight states: Arkansas, Alabama, Kansas, Florida, Georgia, Missouri, Oklahoma, Tennessee and Texas. The Arkansas locations include Rogers, Springdale, Fayetteville, Russellville, Conway, Little Rock, North Little Rock, Jacksonville, Benton, Hot Springs and Jonesboro.