The ' Fast Food Exodus ' is real, and everything we're seeing in the LSR landscape has something to do with it. While some cry, others sell handkerchiefs. ShakeI'm an Equity Analyst and Accountant specializing in restaurant stocks, with a strong foundation in Business Administration and Accounting, complemented by an MBA in Forensic Accounting and Controllership. As the founder of Goulart's Restaurant Stocks, I lead a company focused on analyzing restaurant stocks in the U.S. market. Our coverage spans mult ...

Core Viewpoint - Shake Shack is positioned as a growth stock with significant potential upside compared to Cava Group, which has seen substantial stock price increases but may be overvalued [1][2][6]. Company Performance - Shake Shack's stock has increased by 76% this year, while Cava Group's stock has surged by 237% [1][3]. - Shake Shack reported revenue of $316.9 million for the quarter ending September 25, reflecting a 15% year-over-year increase, despite incurring a loss of $11.1 million due to impairment charges [4]. Market Position and Valuation - Shake Shack operates 552 locations, significantly more than Cava's 352, yet has a market capitalization of $5.5 billion, which is only one-third of Cava's [3]. - The forward price-to-earnings (PE) ratio for Shake Shack is 163.58, compared to Cava's 368.40, indicating that Shake Shack may offer better value for growth investors [7]. Growth Potential - Shake Shack's CEO expressed confidence in the company's ability to expand globally and dominate its niche within the fine-casual dining movement [4]. - With 200 locations outside the U.S., Shake Shack has substantial room for growth both domestically and internationally [5]. Investment Considerations - While Cava Group is currently more popular, Shake Shack is viewed as a more reasonable investment option for growth due to its lower valuation and potential for solid long-term returns [6][8].

Group 1 - The core viewpoint is that despite concerns about a potential recession in the U.S. economy due to slowing consumer spending, Shake Shack has demonstrated resilience as consumers continue to dine out [1] Group 2 - The article highlights the experience of Gary Alexander, who has a background in covering technology companies and advising startups, indicating a strong understanding of industry trends [1]

Investors and analysts alike cheered the company's trailing-three-month performance.This week's news from hamburger slinger Shake Shack (SHAK 2.00%) was overwhelmingly positive -- hence the stock's double-digit gain over the past five trading days. According to data compiled by S&P Global Market Intelligence, it ended the week more than 12% higher in price. The major impetus to this gain was the company's latest set of quarterly results, accompanied by several analysts' target price raises.Shaking up a big ...

Sales Performance - Same-Shack sales increased by 2.3% for the thirteen weeks ended September 27, 2023, driven by a 6.5% increase in price mix partially offset by a 4.2% decrease in guest traffic[128] - Average weekly sales were $74,000 for the thirteen weeks ended September 27, 2023, compared to $73,000 in the same period last year, primarily driven by higher menu prices[129] - System-wide sales increased by 24.3% to $438.9 million for the thirteen weeks ended September 27, 2023, compared to the same period last year[130] - Digital sales increased by 5.4% to $83.2 million for the thirteen weeks ended September 27, 2023, representing 31.4% of total Shack sales[130] - Same-Shack sales at suburban Shacks increased by 3.7% while urban Shacks increased by 1.0% for the thirteen weeks ended September 27, 2023[128] - Average weekly sales decreased by 3.9% compared to the thirteen weeks ended June 28, 2023, driven by a decline in guest traffic[129] - Digital sales decreased by 4.3% compared to the thirteen weeks ended June 28, 2023[130] - System-wide sales increased by 2.9% compared to the thirteen weeks ended June 28, 2023[130] - Shack sales for the thirteen weeks ended September 27, 2023 increased 20.7% to $265.0 million, driven by the opening of 48 new domestic Company-operated Shacks and increased menu prices[137] - Licensing revenue for the thirteen weeks ended September 27, 2023 increased 35.1% to $11.2 million, primarily due to the opening of 45 net new licensed Shacks and higher sales at existing licensed Shacks[139] - Licensing revenue for the thirty-nine weeks ended September 27, 2023 increased 33.8% to $30.2 million, driven by the opening of 45 net new licensed Shacks and higher sales at existing licensed Shacks[139] Revenue and Profitability - Total revenue for the thirteen weeks ended September 27, 2023 increased to $276.2 million, with Shack sales accounting for 95.9% of total revenue[134] - Net income attributable to Shake Shack Inc. for the thirteen weeks ended September 27, 2023 was $7.6 million, compared to a net loss of $2.0 million in the same period last year[134] - Total revenue for the thirty-nine weeks ended September 27, 2023 increased to $801.3 million, with Shack sales accounting for 96.2% of total revenue[134] - Shack-level operating profit for the thirteen weeks ended September 27, 2023 was $54.0 million, representing a 20.4% margin, compared to $36.1 million and a 16.4% margin in the same period last year[179] - Shack-level operating profit for the thirty-nine weeks ended September 27, 2023 was $153.6 million, representing a 19.9% margin, compared to $108.5 million and a 17.0% margin in the same period last year[179] - Total revenue for the thirteen weeks ended September 27, 2023 was $276.2 million, compared to $227.8 million in the same period last year[179] - Total revenue for the thirty-nine weeks ended September 27, 2023 was $801.3 million, compared to $661.9 million in the same period last year[179] - Net income for the thirteen weeks ended September 27, 2023 was $8.136 million, compared to a net loss of $2.311 million for the same period in 2022[185] - Adjusted EBITDA for the thirteen weeks ended September 27, 2023 was $35.784 million, representing a 13.0% margin, compared to $19.807 million and an 8.7% margin for the same period in 2022[185] - Total revenue for the thirteen weeks ended September 27, 2023 was $276.2 million, compared to $227.8 million for the same period in 2022[185] - Adjusted pro forma net income for the thirteen weeks ended September 27, 2023 was $7.537 million, compared to a net loss of $2.322 million for the same period in 2022[194] - Adjusted pro forma earnings per fully exchanged and diluted share for the thirteen weeks ended September 27, 2023 was $0.17, compared to a loss of $0.06 per share for the same period in 2022[195] Costs and Expenses - Food and paper costs for the thirteen weeks ended September 27, 2023 increased 13.9% to $77.2 million, primarily due to the opening of 48 new domestic Company-operated Shacks[141] - Labor and related expenses for the thirteen weeks ended September 27, 2023 increased 17.9% to $76.2 million, primarily due to the opening of 48 new domestic Company-operated Shacks[144] - Food and paper costs as a percentage of Shack sales decreased to 29.1% for the thirteen weeks ended September 27, 2023, driven by menu price increases partially offset by increased commodity costs[142] - Labor and related expenses as a percentage of Shack sales decreased to 28.8% for the thirteen weeks ended September 27, 2023, primarily due to labor efficiencies and sales leverage[145] - Other operating expenses for the thirteen weeks ended September 27, 2023 increased 10.8% to $37.3 million, driven by higher facilities costs and transaction costs due to the opening of 48 new domestic Company-operated Shacks[147] - Occupancy and related expenses for the thirteen weeks ended September 27, 2023 increased 17.1% to $20.3 million, primarily due to the opening of 48 new domestic Company-operated Shacks[150] - General and administrative expenses for the thirteen weeks ended September 27, 2023 increased 14.9% to $30.9 million, driven by increased wages, marketing, and technology investments[153] - Depreciation and amortization expense for the thirteen weeks ended September 27, 2023 increased 24.0% to $23.1 million, due to incremental depreciation from new Shacks and technology projects[156] - Pre-opening costs for the thirteen weeks ended September 27, 2023 increased 63.4% to $5.0 million, driven by wages, legal costs, and travel expenses related to Shack openings[159] - Impairment and loss on disposal of assets for the thirteen weeks ended September 27, 2023 decreased 16.9% to $0.5 million, due to fewer abandoned construction projects[162] Cash Flow and Financial Position - Cash and cash equivalents as of September 27, 2023 was $190.0 million, compared to $256.998 million as of September 28, 2022[203] - Net cash provided by operating activities for the thirty-nine weeks ended September 27, 2023 was $90.591 million, compared to $54.335 million for the same period in 2022[203] - Net cash used in investing activities for the thirty-nine weeks ended September 27, 2023 was $126.264 million, compared to $95.212 million for the same period in 2022[203] - Net cash used in financing activities for the thirty-nine weeks ended September 27, 2023 was $4.825 million, compared to $4.529 million for the same period in 2022[203] - The company believes its existing cash and cash equivalents balances and cash from operations will be sufficient to fund its operating and finance lease obligations, capital expenditures, Tax Receivable Agreement obligations and working capital needs for at least the next 12 months and the foreseeable future[201] - Net cash provided by operating activities increased by $36.3 million to $90.6 million for the thirty-nine weeks ended September 27, 2023, compared to $54.3 million for the same period in 2022[204] - Net cash used in investing activities increased by $31.1 million to $126.3 million for the thirty-nine weeks ended September 27, 2023, primarily due to a $94.0 million purchase of held-to-maturity debt securities and an $18.2 million increase in capital expenditures[205] - Net cash used in financing activities increased by $0.3 million to $4.8 million for the thirty-nine weeks ended September 27, 2023, driven by higher withholding taxes related to equity awards[206] Debt and Financing - The company issued $250.0 million in 0% Convertible Senior Notes due 2028, which can be converted into cash, shares of Class A common stock, or a combination of both[207] - The Revolving Credit Facility was amended to modify the benchmark interest rate, with no amounts outstanding as of September 27, 2023[208] - The Revolving Credit Facility is secured by a first-priority security interest in substantially all assets of SSE Holdings and its guarantors[209] - Material contractual obligations include operating and finance lease obligations, long-term debt, and liabilities under the Tax Receivable Agreement[210] - Purchase obligations primarily consist of real estate and facility commitments, inventory purchases, and marketing-related contracts, with most due within the next 12 months[212] - The company remains in compliance with all covenants under the Revolving Credit Facility as of September 27, 2023[209] Other Income and Expenses - Other income, net for the thirteen weeks ended September 27, 2023 increased 132.2% to $3.4 million, primarily due to higher interest income from cash equivalents[164] - Interest expense for the thirteen weeks ended September 27, 2023 decreased by 8.8% to $0.4 million compared to the same period last year[166] - Interest expense for the thirty-nine weeks ended September 27, 2023 increased by 8.4% to $1.2 million compared to the same period last year[166] - Income tax expense for the thirteen weeks ended September 27, 2023 was $0.5 million, compared to a benefit of $1.5 million in the same period last year, representing a 135.1% change[169] - Income tax expense for the thirty-nine weeks ended September 27, 2023 was $1.7 million, compared to a benefit of $5.1 million in the same period last year, representing a 134.2% change[169] - Net income attributable to non-controlling interests for the thirteen weeks ended September 27, 2023 improved to $0.5 million from a loss of $0.3 million in the same period last year[172] - Net income attributable to non-controlling interests for the thirty-nine weeks ended September 27, 2023 improved to $0.7 million from a loss of $1.5 million in the same period last year[172] Store Operations and Expansion - The company opened 10 new domestic Company-operated Shacks, 4 new domestic licensed Shacks, and 11 new international licensed Shacks during the third quarter of 2023[131] - As of September 27, 2023, there were 495 Shacks in operation system-wide, including 280 domestic Company-operated Shacks, 39 domestic licensed Shacks, and 176 international licensed Shacks[127] Accounting and Risk Management - No significant changes to critical accounting policies or market risk exposure were reported compared to the previous fiscal year[213][215]

Core Insights - Shake Shack aims to expand both domestically and internationally, positioning itself within the "fine casual" dining niche, which is currently underrepresented in the industry [1][2] - The company currently operates approximately 330 locations and recently reported an earnings beat, resulting in a stock increase of 7.79% [2] - Shake Shack has a presence in about 25 countries, including the Middle East, Asia, and the U.K., with plans to explore opportunities in continental Europe [3] Company Strategy - The CEO emphasized the goal of bringing Shake Shack to a global audience, indicating a strong ambition for growth [1] - The company is experimenting with new restaurant formats, such as drive-throughs, to enhance customer accessibility and change the current dining dynamic [2] - Management is selective about new restaurant locations and partnerships, ensuring strategic expansion into new markets [3]

Core Viewpoint - Shake Shack's strong Q3 2024 financial results and positive outlook for 2025 have led to a significant increase in its stock price, reflecting investor confidence in the company's growth trajectory [1][2][3]. Financial Performance - In Q3 2024, Shake Shack's revenue increased by nearly 15% year-over-year, reaching $317 million, driven by the opening of 17 new locations and same-store sales growth of over 4%, marking the ninth consecutive quarter of same-store sales increases [2][3]. - The company's restaurant-level operating margin for Q3 was 21%, surpassing management's guidance, indicating progress in profitability [3]. Growth Outlook - Management has raised the lower end of its financial guidance for 2024, signaling strong business performance, and anticipates opening up to 85 new locations in 2025, compared to 75 in 2024, indicating rapid growth potential for the company [4][5]. - The company is also focusing on reducing pre-opening expenses and improving unit economics for existing stores, suggesting a more disciplined approach to profitability [5].

Shake Shack Inc. (NYSE:SHAK) Q3 2024 Earnings Conference Call October 30, 2024 8:00 AM ET Company Participants Michael Oriolo - Vice President, FP&A & Investor Relations Rob Lynch - Chief Executive Officer Katie Fogertey - Chief Financial Officer Conference Call Participants Michael Tamas - Oppenheimer & Company Brian Vaccaro - Raymond James Lauren Silberman - Deutsche Bank Christine Cho - Goldman Sachs Brian Mullan - Piper Sandler Andrew Charles - TD Cowen Brian Harbour – Morgan Stanley Sharon Zackfia - Wi ...

1 Third Quarter 2024 Shareholder Letter NOW SERVING: BLACK TRUFFLE BURGERS Q3 2024 HIGHLIGHTS BUSINESS OVERVIEW THIRD QUARTER 2024 HIGHLIGHTS: • Total revenue grew 14.7% year-over-year to $316.9m. • Shack sales grew 15.1% year-over-year to $304.9m. • Licensing revenue grew 7.1% year-over-year to $12.0m. • System-wide sales grew 12.8% year-over-year to $495.1m. • Average weekly sales (AWS) was +3% year-over-year at $76k. • Same-Shack sales (SSS) grew 4.4% year-over-year. • Operating loss of $18.0m, inclusive ...

Core Insights - Shake Shack Inc. reported strong third-quarter fiscal 2024 results, with both earnings and revenues exceeding Zacks Consensus Estimates, leading to a 10% increase in share price during pre-market trading [1][3]. Financial Performance - Adjusted earnings per share (EPS) for the third quarter were 25 cents, surpassing the consensus estimate of 20 cents, and up from 17 cents in the prior-year quarter [3]. - Quarterly revenues reached $316.9 million, beating the consensus mark of $315 million, and reflecting a year-over-year increase of 14.7% [3]. - Same-Shack sales grew by 4.4% year over year, compared to 4% growth in the previous quarter, with estimates initially set at 2% [3]. - Shack sales rose 15.1% year over year to $304.9 million, exceeding expectations of $302.6 million [4]. - Licensing revenues increased by 7.1% year over year to $12 million, surpassing the anticipated $11.9 million [4]. - Total expenses for the quarter were $334.9 million, higher than the previous year's $270.6 million and above the estimate of $306.5 million [6]. - Adjusted EBITDA for the quarter was $45.8 million, up from $35.8 million in the year-ago quarter, with an adjusted EBITDA margin expansion of 140 basis points to 14.4% [6]. Operational Highlights - The company experienced an operating loss of $18 million, compared to a gain of $5.7 million in the prior-year quarter [5]. - Restaurant-level profit margin was reported at 21%, an increase of 60 basis points year over year [5]. - Food and paper costs as a percentage of revenues decreased by 90 basis points to 28.2%, while labor costs contracted by 80 basis points to 28% [5]. Balance Sheet - As of September 25, 2024, cash and cash equivalents totaled $310.9 million, up from $224.7 million as of December 27, 2023 [7]. - Total long-term debt was reported at $246.4 million, slightly up from $245.6 million as of December 27, 2023 [7]. Future Outlook - For the fourth quarter of fiscal 2024, the company expects total revenues between $322.6 million and $327 million, with licensing revenues projected between $11.6 million and $12 million [8]. - For the full fiscal 2024, revenues are anticipated to reach $1.25 billion, with licensing revenues expected between $44.6 million and $45 million [9]. - The company projects restaurant-level profit margins to reach 21% for the fiscal year, with adjusted EBITDA expected in the range of $168 million to $170 million [9]. - Approximately 45 company-operated openings and 35-40 licensed Shack openings are anticipated in fiscal 2024 [10].