Shake Shack's Pre-IPO Investors Cashing Out

Shake Shack on Thursday announced plans to convert Class B shares into Class A shares, enabling some early investors like Leonard Green, its top holder, to exit about nine months after the burger chain's public debut. In a regulatory filing, the New York company said it would convert all of its roughly 21 million Class B shares into Class A shares. All holders of those shares have filed to sell them after the exchange. Private-equity investor Mr. Green and his affiliates, which together owned about 20% of Shake Shack as of mid-August, filed to sell most of their stake. Founder Daniel Meyer, chief executive of Union Square Hospitality Group--which includes Union Square Cafe and Gramercy Tavern--will whittle his stake to about 30,000 shares, according to the filing. Several other pre-IPO investors will significantly reduce their holdings. Shake Shack shares declined 5% in premarket trading Thursday. Shake Shack went public in January and was part of a wave of well-received fast-casual IPOs. Shares in the boutique burger joint more than doubled on their first day of trading, giving the company a valuation of about $1.6 billion. The stock shot up to an all-time high of $96.75 in May but has since halved, closing at $48.48 a share through Wednesday. It remains about 5% higher than the debut price. It is common for investors to sell shares after an IPO lockup period expires. For Shake Shack, the lockup period ended July 29, at which point holders first sold some of their holdings. Write to Lisa Beilfuss at lisa.beilfuss@wsj.com