In CFO Brew’s latest live event, Katie Fogertey, CFO of Shake Shack, spoke with editor Drew Adamek about building and executing efficient strategy amid turbulent times. Here are some key takeaways from their conversation.
This interview has been lightly edited for length and clarity.
How do you go about balancing the strategic needs of the job with the operational needs of the job?
Shake Shack is, at its core, a multi-unit restaurant company. We have over 370 company-owned restaurants. In total, we have almost 500 restaurants system-wide. So, being able to partner with operations is absolutely critical. And really with strategy, you have to dedicate a chunk of your time to making sure that your strategy is the right strategy, and running your models and really understanding where your opportunities are, which is very important.
Anybody can come up with those types of opportunities. It doesn’t mean a thing to shareholder value creation, or to the long-term health of your company, if you don’t actually implement them. So, I think when you’re setting strategy, it’s best to align on strategy that you agree with, that your CEO is behind, that you can get the org to rally behind and just execute that, rather than introducing a lot of churn along the way.
That’s not to say you shouldn’t be flexible about how you're getting there, but your destination should be your destination unless something radically different happens.
How are you balancing long-term initiatives with short-term realities?
It’s one of perennial challenges, and it’s why, every day that I wake up, it’s very exciting to work at Shake Shack. We know our long-term vision. We have the destination. The way that we get there, we’re constantly having to navigate additional challenges, whether it is you have a particular goal for comp, maybe it’s a macro issue, maybe it’s how you’re building out your stores changes a little bit. On that side, knowing your end point, you’re just going to have to continue to refine and hone in on that strategy in order to execute on that long term goal in a way that makes sense for everybody.
If it’s a margin goal, and part of it has to do with labor utilization, continuously listening to team members and managers and area directors on feedback on strategies is absolutely critical in order to best execute on that long-term vision.
Is there someone that you see as your key strategic partner within the company? And how do you work with the larger organization as the CFO?
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As CFO, you have many strategic partners. There’s not just one. What I did do, though, when I came to Shake Shack was I set up a business intelligence unit, which is really rooted in deep data. I saw a great need and potential for a small team of people to harness big data.
From a forecasting perspective, that team is absolutely critical to a lot of the things that I do, whether that’s forecasting sales, [or] site selection, and really getting comfortable with the new restaurants that we’re building. We have internal and external models now to vet them against each other, and we really understand what’s happening [and] how our sales are driven. This has been absolutely critical to how we’re feeding and staffing our restaurants as well because we’re able to get a much closer view on sales trends at a micro level, and we can pivot and be very tight on how we’re staffing our restaurants.
But really, everybody in the whole company is a critical partner to the CFO. It doesn’t matter how great an idea is if you don’t have a team of people to rally behind it. Shareholder value by people writing a lot of things on a piece of paper, or putting a lot of things in an Excel spreadsheet. Shareholder value is created by actually executing on a good vision and delivering results.
How do you spend your day balanced between the strategic job that you want to do, and the technical finance and accounting part of the CFO role?
That is absolutely a critical part of the job. I have some peers who have gone from the Wall Street route to the CFO route, and I think the ones that are more successful are those that actually do dig into the technical side of accounting, the technical side of the finance, and don’t hand it over to other people.
You absolutely need trusted leaders throughout your entire finance board, but you have to understand the way that your accounting works. You have to understand where things are falling on your P&L or you’re going to miss opportunities. Just because something’s always been done a certain way doesn’t mean that that is the way that you would want it to move forward.