Shake Shack posted a profit in the third quarter driven by higher sales https://t.co/y302SqcvSm ...

Core Insights - Shake Shack (SHAK) reported revenue of $367.41 million for the quarter ended September 2025, marking a year-over-year increase of 15.9% and exceeding the Zacks Consensus Estimate by 1.09% [1] - The earnings per share (EPS) for the same period was $0.36, up from $0.25 a year ago, representing a surprise of 16.13% over the consensus estimate of $0.31 [1] Financial Performance Metrics - Shake Shack's same-Shack sales growth was 4.9%, surpassing the average estimate of 2.8% [4] - The company operated 271 licensed locations, slightly below the average estimate of 273 [4] - System-wide Shack counts reached 630, compared to the average estimate of 633 [4] - Domestic company-operated Shack counts were 359, close to the average estimate of 360 [4] - International licensed Shack counts totaled 225, slightly below the average estimate of 226 [4] - Domestic licensed Shack counts were 46, compared to the average estimate of 48 [4] - Licensing revenue was reported at $14.57 million, exceeding the average estimate of $13.49 million and reflecting a year-over-year increase of 21.1% [4] - Shack sales revenue was $352.85 million, above the average estimate of $350.14 million, indicating a year-over-year change of 15.7% [4] - Shack system-wide sales reached $571.5 million, surpassing the average estimate of $566.61 million, with a year-over-year change of 15.4% [4] Stock Performance - Over the past month, Shake Shack's shares have returned -2%, while the Zacks S&P 500 composite has increased by 3.6% [3] - The stock currently holds a Zacks Rank 4 (Sell), suggesting potential underperformance relative to the broader market in the near term [3]

Core Insights - Shake Shack has achieved a third consecutive quarter of earnings acceleration, surpassing both EPS and revenue expectations while showing sustained operational improvement [1] Financial Performance - The company reported earnings per share (EPS) that exceeded market expectations, indicating strong financial health and operational efficiency [1] - Revenue figures also surpassed forecasts, reflecting robust sales growth and effective management strategies [1] Operational Improvement - Shake Shack demonstrated sustained operational improvements, which contributed to its ability to beat earnings and revenue expectations [1]

Financial Data and Key Metrics Changes - Total revenue increased by 15.9% year over year to $367.4 million, driven by strong new shack openings and growth in the comp shack base [25][26] - Adjusted EBITDA grew by 18.2% year over year to $54.1 million, representing 14.7% of total revenue [33] - Net income attributable to Shake Shack Inc. was $12.5 million, or $0.30 per diluted share [33] Business Line Data and Key Metrics Changes - Company-operated shack sales increased by 15.7% year over year to $352.8 million [25] - Licensing revenue grew by 21.1% year over year to approximately $14.6 million, with license sales up by 15% to $218.7 million [25][26] - Average weekly sales rose by 2.6% year over year to $78,000 [26] Market Data and Key Metrics Changes - Positive same-shack sales growth was recorded for the 19th consecutive quarter, with a 4.9% increase in same-shack sales [25][26] - Traffic grew by 1.3% in the quarter, with positive comps in nearly all regions, although macro pressures were noted in New York Metro and Washington, D.C. [26][27] Company Strategy and Development Direction - The company is focused on building a resilient long-term business through strategic investments and operational improvements [3][4] - Plans to open 55 to 60 new shacks in 2026, with a strong pipeline of new openings [20][25] - Emphasis on culinary innovation and enhancing the guest experience through improved operational practices and supply chain strategies [12][15][18] Management's Comments on Operating Environment and Future Outlook - Management acknowledged macroeconomic pressures but expressed confidence in the company's ability to navigate challenges and continue growth [24][39] - The company is committed to maintaining quality while diversifying suppliers to mitigate risks associated with beef inflation [13][41] - Future expectations include a low single-digit net impact on food and paper costs despite anticipated mid-teens beef inflation [31][41] Other Important Information - The company has seen improvements in guest satisfaction metrics, including speed of service, which decreased from approximately seven minutes in 2023 to about five minutes and 50 seconds [11][55] - Significant investments in marketing and media are planned to drive traffic and sales, with a focus on balancing premium offerings with value [61][70] Q&A Session Summary Question: Can you elaborate on supply chain initiatives as a driver of margin expansion? - Management confirmed that there will be no product modifications and emphasized the commitment to maintaining quality standards with new suppliers [40] - Expected cost savings from supply chain strategies are anticipated to grow into next year, with a moderation of food and paper costs as a percentage of sales [41][42] Question: What are the pressures on younger consumers and spending trends? - Management noted pressures on lower-income consumers and younger populations, leading to a shift towards value offerings [43][44] - The company has seen significant growth in app traffic and sales by leveraging in-app value platforms [45][46] Question: How does the company plan to balance premium and value offerings? - Management stated that pricing power exists, and the focus will be on keeping core menu prices low while allowing for premium innovations to drive check growth [69][70]

Core Insights - The fast-casual burger chain reported a net income of $12.5 million, a significant improvement compared to a loss of $10.2 million in the same quarter a year ago [1] Financial Performance - The company achieved a net income of $12.5 million in the latest quarter [1] - This represents a turnaround from a loss of $10.2 million in the same quarter of the previous year [1]

Financial Performance - Total revenue reached $367.4 million, an increase of 15.9% compared to 2024, with $352.8 million from Shack sales and $14.6 million from licensing revenue[5] - System-wide sales amounted to $571.5 million, up 15.4% versus 2024, while same-Shack sales increased by 4.9%[5] - Operating income was $18.5 million, a significant improvement from an operating loss of $18.0 million in 2024[5] - Net income stood at $13.7 million, compared to a net loss of $11.1 million in 2024, with adjusted EBITDA of $54.1 million, up 18.2%[5] - Shack sales for the thirteen weeks ended September 24, 2025, reached $352.8 million, a 15.7% increase from $304.9 million in the same period last year[17] - Total revenue for the thirty-nine weeks ended September 24, 2025, was $1,044.8 million, up 13.1% from $923.9 million in the prior year[17] - Net income attributable to Shake Shack Inc. for the thirteen weeks ended September 24, 2025, was $12.5 million, compared to a net loss of $10.2 million in the same period last year[17] - Net income for the thirteen weeks ended September 24, 2025, was $13.7 million, compared to a loss of $11.1 million for the same period in 2024[33] Profitability Metrics - Restaurant-level profit was $80.6 million, representing 22.8% of Shack sales[5] - Restaurant-level profit for the thirty-nine weeks ended September 24, 2025, was $227.0 million, representing a 22.6% profit margin compared to 20.9% in the previous year[26] - EBITDA for the thirteen weeks ended September 24, 2025, was $48.7 million, significantly up from $11.2 million in the prior year, representing a year-over-year increase of 335%[33] - Adjusted EBITDA for the thirty-nine weeks ended September 24, 2025, was $153.8 million, compared to $128.9 million for the same period in 2024, reflecting a growth of 19.4%[33] - Adjusted EBITDA margin for the thirteen weeks ended September 24, 2025, was 14.7%, slightly up from 14.4% in the same period of 2024[35] - Adjusted pro forma net income for the thirteen weeks ended September 24, 2025, was $15.9 million, compared to $11.2 million for the same period in 2024, indicating a 42% increase[41] Shareholder Information - Earnings per share (diluted) for the thirteen weeks ended September 24, 2025, was $0.30, compared to a loss of $0.26 in the same period last year[17] - The company reported a total of 40,250 weighted-average shares of Class A common stock outstanding for the thirteen weeks ended September 24, 2025[17] - The weighted average shares of Class A common stock outstanding—diluted for the thirteen weeks ended September 24, 2025, was 41.9 million, compared to 40.0 million for the same period in 2024[41] - Adjusted pro forma earnings per fully exchanged share for the thirty-nine weeks ended September 24, 2025, was $0.94, up from $0.66 in the prior year[41] Capital Expenditures and Cash Flow - The company incurred $106.7 million in capital expenditures for the thirty-nine weeks ended September 24, 2025, compared to $100.8 million in the previous year[19] - Operating cash flow for the thirty-nine weeks ended September 24, 2025, was $159.2 million, compared to $126.1 million in the prior year[19] Assets and Liabilities - Cash and cash equivalents increased to $357.8 million from $320.7 million in December 2024[15] - Total assets grew to $1.83 billion, up from $1.70 billion in December 2024[15] - Total liabilities increased to $1.29 billion, compared to $1.20 billion in December 2024[15] - Stockholders' equity attributable to Shake Shack Inc. rose to $509.0 million from $470.0 million in December 2024[15] Operational Expansion - The company opened 13 new Company-operated Shacks and seven new licensed Shacks during the quarter[5] - Shack-level operating expenses as a percentage of Shack sales decreased to 77.2% for the thirteen weeks ended September 24, 2025, from 79.0% in the same period last year[26] Compensation - The company incurred $4.4 million in equity-based compensation for the thirteen weeks ended September 24, 2025, compared to $4.2 million in the same period of 2024[33]

Industry Overview - The restaurant industry is facing a complex operating environment marked by changing consumer behavior, ongoing inflation, and supply chain issues [1][4] - Strategic actions such as digital transformation, operational optimization, and menu innovation are expected to support sector performance in Q3 [1][9] Growth Initiatives - Growth strategies include leveraging digital platforms, enhancing delivery options, and expanding physical locations in urban and suburban areas [2] - Restaurants are utilizing loyalty programs and tailored marketing to increase customer engagement and frequency of visits [2][3] - New limited-time offerings and product extensions are likely driving transaction momentum, especially in quick-service and fast-casual formats [2] Pricing and Cost Management - Operators are employing balanced pricing and promotional strategies to maintain customer traffic while protecting profitability [3] - Adoption of kitchen technology and data analytics is expected to improve efficiency and offset rising costs [3] - Enhancements in value perception through portion optimization and bundled meals are likely strengthening brand loyalty [3] Macroeconomic Challenges - The industry continues to face macroeconomic headwinds, including high beef and seafood costs, tariff uncertainties, and labor inflation impacting margins [4] - A cautious consumer environment, particularly among value-oriented households, is influencing discretionary spending on dining out [4] Earnings Outlook - The Zacks Retail-Wholesale sector is projected to see a 5.3% year-over-year increase in total earnings for Q3 2025, down from a 12.9% rise in Q2 [6][9] - Revenue growth for the sector is expected to be 5.6% year-over-year, compared to 6.1% in the previous quarter [6] Company-Specific Insights - Shake Shack's Q3 performance is anticipated to benefit from traffic-driven growth, menu innovation, and operational efficiency, with revenues estimated at $363.5 million, a 14.7% increase year-over-year [10][12] - Restaurant Brands is expected to show strong momentum due to operational improvements and strategic investments, with revenues projected at $2.39 billion, a 4.3% increase year-over-year [13][15] - BJ's Restaurants is likely to see revenue growth of 3% year-over-year, with an estimated $335.6 million in revenues, driven by menu innovation and operational efficiency [16][18]

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Core Insights - Carillon Tower Advisers reported a continued upward trend in equity markets, driven by AI acceleration, reduced inflationary impacts, and potential interest rate cuts from the U.S. Federal Reserve [1] - The Russell 2000® Growth Index increased by 12.19% in Q3 2025, slightly underperforming the Russell 2000 Value Index, which rose by 12.60% [1] Company Overview: Shake Shack Inc. (NYSE: SHAK) - Shake Shack Inc. operates a fast-casual restaurant chain offering a variety of food and beverage options, including burgers and milkshakes [3] - The stock experienced a one-month return of -2.60% and a 52-week decline of 19.75%, closing at $91.18 per share with a market capitalization of $3.892 billion on October 28, 2025 [2] Financial Performance - Shake Shack reported total revenue of $356.5 million in Q2 2025, exceeding its guidance range [4] - Despite strong results, the stock price declined due to quarterly results not meeting elevated investor expectations and slower traffic trends in the fast-casual dining sector [3][4] Investment Sentiment - Shake Shack is not among the 30 most popular stocks among hedge funds, with 34 hedge fund portfolios holding the stock at the end of Q2 2025, down from 39 in the previous quarter [4] - While the company has potential as an investment, certain AI stocks are viewed as offering greater upside potential with less downside risk [4]

Core Viewpoint - Shake Shack Inc (NYSE: SHAK) is experiencing pressure in the consumer sector, which is affecting its performance, but long-term investors believe the company will eventually rebound and surprise positively [1][2]. Group 1: Market Performance - Shake Shack has been added to JPMorgan's top short ideas list, indicating bearish sentiment from some analysts [1]. - Despite challenges in the consumer staples sector, Shake Shack has outperformed major competitors like Chipotle and McDonald's in Q1 results [2]. - The company is benefiting from recent menu innovations, marketing investments, and operational initiatives, which are driving returns on investments [2]. Group 2: Investment Sentiment - Long-term investors, including Josh Brown, express confidence in Shake Shack's potential for recovery and growth, viewing current pressures as temporary [1]. - The Madison Small Cap Fund considers Shake Shack a core investment position, highlighting its long-term growth prospects despite taking some profits [2]. - There is a belief that while Shake Shack has potential, certain AI stocks may offer greater returns with limited downside risk [2].