Shack sales for the second quarter of 2018 were $112.9 million compared to $88.0 million in the same quarter last year, an increase of $24.9 million, or 28.3%, due primarily to the opening of 25 new domestic company-operated Shacks

Same-Shack sales increased 1.1% for the second quarter of 2018 versus a 1.8% decline in the second quarter last year. The increase in same-Shack sales, consisted of a combined increase in price and sales mix of 3.7% offset by a 2.6% decrease in guest traffic. The comparable Shack base includes those restaurants open for 24 full fiscal months or longer. For the second quarter of 2018, the comparable Shack base included 50 Shacks versus 37 Shacks for the second quarter of 2017.

Average weekly sales for domestic company-operated Shacks decreased to $89,000 for the second quarter of 2018 compared to $92,000 for the same quarter last year, primarily due to the addition of newer Shacks at a broader range of average unit volumes.

As of today, we’ve opened 12 new domestic company-operated Shacks so far this year, and remain on track to open 32 to 35 in 2018, although our opening schedule is heavily back-end weighted to the fourth quarter.

Third Quarter 2018 Review

Total revenue, which includes Shack sales and licensing revenue, increased 26.5% to $119.6 million in the third quarter of 2018, from $94.6 million in the third quarter of 2017. Shack sales for the third quarter of 2018 were $115.9 million compared to $91.1 million in the same quarter last year, an increase of $24.8 million, or 27.2%, due primarily to the opening of 28 new domestic company-operated Shacks. Licensing revenue for the third quarter was $3.8 million, an increase of 7.3% from $3.5 million in the same quarter last year, due primarily to the opening of 17 new licensed Shacks.

Same-Shack sales decreased 0.7% for the third quarter of 2018 versus a 1.6% decline in the third quarter last year. The decrease in same-Shack sales consisted of a 4.0% decrease in guest traffic, as the Company continues to execute on its long-term growth strategy through increasing market share, partially offset by an increase in price and sales mix of 3.3%.The comparable Shack base includes those restaurants open for 24 full fiscal months or longer. For the third quarter of 2018, the comparable Shack base included 54 Shacks versus 39 Shacks for the third quarter of 2017.

Average weekly sales for domestic company-operated Shacks decreased to $86,000 for the third quarter of 2018 compared to $91,000 for the same quarter last year, primarily due to the addition of newer Shacks at a broader range of average unit volumes.

Why Analysts Expect Shake Shack’s Revenue to Rise in Q4

Feb 20, 2019

Analysts expect Shake Shack to post revenue of $118.82 million in the fourth quarter, a rise of 23.6% from $96.1 million in the corresponding quarter of 2017. This revenue growth is likely to be driven by the company’s opening of new restaurants in the last four quarters.

In 2018, Shake Shack’s management expects its revenue to be in the range of $450 million–$452 million, which represents a rise of 25.4%–26.0% from its revenue of $358.8 million in 2017. The company’s management also expects to open 33–34 company-owned restaurants and 14–16 franchised restaurants during the same period.

Compared to the fourth quarter of 2017, Shake Shack operated 17 more company-owned restaurants and 12 more franchised restaurants by the end of the third quarter of 2018. These new restaurants, along with the restaurants it opened in the fourth quarter of 2018, are expected to have driven its revenue in the quarter.

To drive its SSSG (same-store sales growth), Shake Shack is focusing on menu innovations and enhancing the customer experience through the implementation of digital advancements.

During the third quarter, Shake Shack opened its first innovation kitchen at its home office in Manhattan. The facility will be used to test new menu items, kitchen designs, and digital initiatives. After successful testing, the changes will be implemented in the company’s restaurants. Chick’n Bites, which were introduced in mid-September, were the first item to come out of the innovation kitchen.

During its third-quarter earnings call, the company’s management announced the introduction of 20 hybrid model restaurants, which would have self-order kiosks and cashiers, by the end of 2018. In the third quarter, the company also introduced browser-based ordering for mobile and desktop in ten restaurants, which would allow customers to order without using the app.

Why Analysts Expect Shake Shack’s EPS to Fall in Q4

In the fourth quarter, analysts expect Shake Shack to post adjusted EPS of $0.03, a fall of 69% from $0.10 in the corresponding quarter of 2017. The fall in its EBIT margin, partially offset by revenue growth and a lower effective tax rate, will likely lower its EPS in the fourth quarter.

Analysts expect Shake Shack’s EBIT margin to fall from 6.5% to 1.3% due to an increase in its cost of goods sold, higher labor expenses, and higher G&A (general and administrative) expenses. Higher beef prices are also expected to raise its cost of goods sold. The increase in hourly wages and the introduction of new lower-volume restaurants are expected to increase SHAK’s labor expenses during the quarter. The company’s G&A expenses are expected to rise due to its investment in the Project Concrete initiative, which is in place to upgrade the company’s operational and financial systems.

Financial Highlights for the Fourth Quarter 2018:
.

• Total revenue increased 29.3% to $124.3 million.
• Shack sales increased 29.6% to $120.7 million.
• Same-Shack sales increased 2.3%.
• Shack system-wide sales increased 27.2% to $178.9 million
• Operating income was $2.8 million, or 2.3% of total revenue, which included the impact of costs associated with Project Concrete and other one-time items totaling $0.7 million.
• Shack-level operating profit*, a non-GAAP measure, increased 15.6% to $27.2 million, or 22.5% of Shack sales.
• 20 net system-wide Shack openings, including 17 domestic company-operated Shacks and three net licensed Shacks.

Total revenue, which includes Shack sales and licensing revenue, increased 29.3% to $124.3 million in the fourth quarter of 2018 from $96.1 million for the fourth quarter of 2017. Shack sales for the fourth quarter of 2018 were $120.7 million, an increase of 29.6% from $93.1 million in the same quarter last year due primarily to the opening of 34 new domestic company-operated Shacks between the fourth quarter of 2018 and the fourth quarter of 2017, as well as same-Shack sales growth.

Same-Shack sales increased 2.3% for the fourth quarter of 2018 versus 0.8% growth in the fourth quarter last year, which was primarily driven by a combined increase of 2.6% in price and sales mix partially offset by decreased guest traffic of 0.3%. The comparable Shack base includes those restaurants open for 24 full fiscal months or longer. At the end of the fourth quarter of 2018, the comparable Shack base included 61 Shacks versus 43 Shacks for the fourth quarter of 2017.

Average weekly sales for domestic company-operated Shacks decreased to $81,000 for the fourth quarter of 2018 compared to $85,000 for the same quarter last year, primarily due to the addition of newer Shacks at a broader range of average unit volumes.

Operating income decreased to $2.8 million for the fourth quarter of 2018 from $5.8 million in the same quarter last year. As a percentage of revenue, operating income margins decreased 380 basis points to 2.3%. These decreases were primarily due to higher pre-opening costs from a 55% increase in the number of openings, $0.7 million of one-time costs related to Project Concrete, the Company's enterprise-wide system upgrade initiative, and various factors impacting Shack-level operating profit. As a percentage of Shack sales, Shack-level operating profit margins decreased 270 basis points to 22.5% primarily due to (i) increased labor and related expenses resulting from ongoing increases in minimum wages, regulatory factors, such as the Fair Workweek legislation in New York City, and the opening of 17 new domestic company-operated Shacks during the quarter, which typically carry higher labor costs during the first few months of operations.

General and administrative expenses increased 30.2% to $15.2 million for the fourth quarter of 2018 from $11.7 million in the same quarter last year, primarily due to the increase in the Company's investment across the business, particularly in digital, people resources and foundational infrastructure to support its ongoing growth initiatives

Shake Shack fails to shake off Omicron impact, forecasts dour sales

February 17, 2022

Feb 17 (Reuters) - Shake Shack Inc forecast first-quarter revenue below estimates as the fast-spreading Omicron variant kept diners away and led to temporary restaurant closures, sending the burger chain's shares down 10% in extended trading.

Benefits from easing COVID-19 Delta infections were short-lived for Shake Shack as the Omicron wave that soon followed dissuaded customers from venturing out, infected staff and set back the recovery of urban-centric restaurants.

"Drivers of our business such as office returns, events, travelers and the general gathering of people that contribute to Shake Shack's best results (turned) downward," Chief Executive Officer Randy Garutti said during an earnings call.

Shake Shack forecast first-quarter revenue of $196 million to $201.4 million, compared with analysts' average estimate of $210.9 million, according to Refinitiv IBES.

"We saw a more acute impact on SHAK sales from Omicron than its more geographically diversified peers ... expectations were just too optimistic and underestimated the Omicron impact," M Science analyst Matthew Goodman said.

Rising paper and food expenses as well as labor costs have also put a squeeze on Shake Shack's margins. Credit Suisse analysts noted the company's margin forecast was also below consensus estimates.

To protect its margins, Shake Shack will jack up prices in March and increase its third-party delivery menu prices, Garutti said. The company in October raised prices by 3% to 3.5%.

Nearly every U.S. restaurant, including Chipotle Mexican Grill and McDonald's, has also raised prices.

In the fourth quarter ended Dec. 29, same-store sales in Shake Shack's urban restaurants, which account for over half of its topline, declined 4% as many city dwellers moved to suburbs during the pandemic.

However, that helped comparable sales at suburban restaurants gain 9%.

Shake Shack also pointed to a sales improvement in recent days, with monthly comparable sales through Feb. 15 jumping 13%, versus a 2% rise last month.