Financial Data and Key Metrics Changes - In Q1 2025, total revenue grew by 10.5% year over year to $320.9 million, marking the highest first quarter total revenue on record [18][19] - Restaurant level profit margin increased by 120 basis points year over year to 20.7%, the highest first quarter margin since 2019 [6][19] - Adjusted EBITDA grew by approximately 13.5% year over year to $40.7 million, representing 12.7% of total revenue [27] Business Line Data and Key Metrics Changes - Company-operated Shack sales increased by 10.4% year over year to $309.8 million, with four new Shack openings [19] - License business revenue grew by 11.1% year over year to $11.1 million, with sales increasing by 10.4% year over year to $179.6 million and seven new license Shack openings [19][14] Market Data and Key Metrics Changes - Nearly two-thirds of markets experienced same Shack sales growth, although major markets like Los Angeles and New York City faced significant weather-related challenges [20] - Traffic was down 4.6% in the quarter due to unfavorable weather and broader industry pressures, with an estimated 400 basis points of traffic pressure attributed to these factors [20][22] Company Strategy and Development Direction - The company aims to grow to at least 1,500 company-operated Shacks, with a focus on innovative thinking and operational improvements [4][5] - Strategic priorities include building a culture of leaders, improving restaurant operations, driving comp sales, and expanding the license business [8][14] - The company is committed to investing in long-term strategic capabilities and accelerating innovation across various operational areas [17] Management's Comments on Operating Environment and Future Outlook - Management acknowledged macroeconomic headwinds impacting transaction growth but emphasized the opportunity to improve guest experience and operational efficiency [4][6] - The company expects low single-digit same Shack sales growth for 2025, with a focus on maintaining competitive pricing and operational improvements [30][31] Other Important Information - The company plans to open 45 to 50 company-operated Shacks in 2025, marking the largest class on record [30] - Menu pricing is expected to increase modestly, with in-Shack prices up approximately 2% year over year [30] Q&A Session Summary Question: Store margins and near-term opportunities - Management highlighted operational improvements and a new labor model as key factors driving margin expansion and confidence in future performance [36][37] Question: Drive-thru strategy and early learnings - The company reported significant improvements in ordering time and guest satisfaction from testing new digital menu boards and combo offerings in drive-thrus [42][45] Question: Q2 comp outlook and underlying assumptions - Management expects low single-digit comps for Q2, driven by new menu innovations and improved weather conditions [90][92] Question: Long-term targets and pricing assumptions - Management confirmed that operational improvements and supply chain efficiencies are expected to support margin expansion without relying heavily on price increases [63][64] Question: Innovation and LTO strategy - The company is focused on maintaining a quarterly cadence for new product innovations while ensuring operational efficiency [72][75]

Financial Data and Key Metrics Changes - In Q1 2025, total revenue grew by 10.5% year over year to $320.9 million, marking the highest first quarter total revenue on record [18][19] - Restaurant level profit margin improved by 120 basis points year over year to 20.7%, the highest first quarter margin since 2019 [7][18] - Adjusted EBITDA increased by approximately 13.5% year over year to $40.7 million, representing 12.7% of total revenue [27] Business Line Data and Key Metrics Changes - In the company-operated business, Shack sales grew by 10.4% year over year to $309.8 million, with four Shack openings including two drive-throughs [19] - The licensing business saw revenue growth of 11.1% year over year to $11.1 million, with sales increasing by 10.4% year over year to $179.6 million and seven new license Shack openings [19][15] Market Data and Key Metrics Changes - Nearly two-thirds of markets experienced same Shack sales growth, although major markets like Los Angeles and New York City faced significant weather-related challenges [20][22] - Traffic was down 4.6% in the quarter due to unfavorable weather and broader industry pressures, with an estimated 400 basis points of traffic pressure attributed to these factors [20][21] Company Strategy and Development Direction - The company aims to grow to at least 1,500 company-operated Shacks, with a focus on innovative thinking and operational improvements [5][6] - Strategic priorities include building a culture of leaders, improving restaurant operations, driving comp sales, and expanding the licensing business [9][15] - The company is committed to investing in long-term strategic capabilities and accelerating innovation across various operational areas [17] Management's Comments on Operating Environment and Future Outlook - Management acknowledged macro headwinds impacting transaction growth but emphasized the opportunity to improve guest experience and reduce costs [5][6] - The company expects to achieve low single-digit same Shack sales growth for 2025, with a focus on menu innovation and culinary strategy to drive traffic [31][54] Other Important Information - The company plans to open 45 to 50 company-operated Shacks in 2025, marking the largest class on record [31] - The balance sheet remains solid with $312.9 million in cash and cash equivalents at the end of the quarter [27] Q&A Session Summary Question: Can you elaborate on the near-term opportunities for margin expansion? - Management highlighted operational improvements and a new labor model as key factors driving productivity and margin growth [37][38] Question: What are the early learnings from the drive-through strategy tests? - Management reported significant improvements in ordering time and guest satisfaction from the new digital menu boards and combo offerings [43][45] Question: What are the underlying assumptions for the Q2 comp outlook? - Management expects low single-digit comps based on current macro trends and new menu innovations, including a summer barbecue menu [93] Question: How does the company plan to balance menu innovation with operational efficiency? - Management emphasized the importance of ensuring that new innovations do not disrupt operational efficiency and are manageable for staff [58][60] Question: What is the company's strategy for driving mix without increasing prices? - Management plans to introduce premium items and combos to enhance mix while minimizing price increases on core items [80][82]

Financial Performance - Total revenue for Q1 2025 was $320.9 million, representing a 10.5% increase compared to 2024, with Shack sales of $309.8 million and licensing revenue of $11.1 million[5]. - System-wide sales reached $489.4 million, up 10.4% from 2024, while same-Shack sales increased by 0.2%[5]. - Net income attributable to Shake Shack Inc. was $4.2 million, or earnings of $0.10 per diluted share, compared to $2.0 million in the same period of 2024[5][17]. - Adjusted EBITDA for the quarter was $40.7 million, reflecting a 13.5% increase from 2024[5]. - Restaurant-level profit was $64.2 million, accounting for 20.7% of Shack sales[5]. - Net income for the thirteen weeks ended March 26, 2025, was $4,513,000, compared to $2,214,000 for the same period in 2024, representing a 103% increase[19]. - Total revenue increased to $320,898,000 in Q1 2025 from $290,504,000 in Q1 2024, reflecting a growth of 10.5%[26]. - Shack sales reached $309,838,000, up from $280,552,000, indicating a 10.4% increase year-over-year[26]. - Restaurant-level profit for the period was $64,240,000, compared to $54,746,000 in the prior year, marking an increase of 17.3%[26]. - Adjusted EBITDA for Q1 2025 was $40,745,000, up from $35,885,000 in Q1 2024, which is a 13.5% increase[32]. - Adjusted EBITDA margin improved to 12.7% in Q1 2025 from 12.4% in Q1 2024[32]. - Adjusted pro forma net income for the same period was $6,398,000, up from $5,623,000, reflecting a 13.8% increase year-over-year[39]. - Earnings per share of Class A common stock—diluted increased to $0.10 for the thirteen weeks ended March 26, 2025, compared to $0.05 for the same period in 2024, a 100% increase[39]. - Adjusted pro forma earnings per fully exchanged share—diluted rose to $0.14, up from $0.13, indicating an increase of 7.7%[39]. Operational Highlights - The company opened four new Company-operated Shacks, including two drive-thrus, and seven new licensed Shacks during the quarter[5]. - The company incurred $2,057,000 in impairments and losses on asset disposals during the quarter, compared to $526,000 in the same period last year[26]. - The restaurant-level profit margin increased to 20.7% from 19.5% year-over-year, indicating improved operational efficiency[26]. - The company incurred an impairment charge and Shack closures amounting to $1,653,000 during the fiscal period[39]. - Legal settlements accounted for expenses of $983,000 in the current fiscal period[39]. Cash and Assets - Cash and cash equivalents as of March 26, 2025, were $312.9 million, a slight decrease from $320.7 million at the end of 2024[15]. - Cash provided by operating activities was $31,222,000, slightly up from $30,665,000 in the previous year[19]. - Cash and cash equivalents at the end of the period were $312,921,000, compared to $260,203,000 at the end of Q1 2024, showing a 20.2% increase[19]. - Total assets increased to $1.727 billion from $1.697 billion at the end of 2024[15]. - Total liabilities rose to $1.230 billion, up from $1.203 billion at the end of 2024[15]. Tax and Shares - The effective tax rate for the thirteen weeks ended March 26, 2025, was assumed at 21.3%[41]. - Non-GAAP adjustments for the period had a per share impact of $0.04, compared to $0.08 in the previous year[42]. - Weighted-average shares of Class A common stock outstanding—diluted increased to 41,864,000 from 41,259,000, a growth of 1.5%[39]. - The tax impact of adjustments was a reduction of $993,000 for the thirteen weeks ended March 26, 2025[39].

Investment Rating - The report maintains a "Buy" rating for McDonald's and Domino's, while Starbucks and Shake Shack are rated as "Hold" [4][46]. Core Insights - The US restaurant sector outlook is tempered due to macroeconomic pressures, geopolitical uncertainty, and changing consumer behaviors, leading to a reduction in adjusted net earnings estimates by approximately 4% for 2025-26 [2][3]. - Same-store sales (SSS) are expected to decline by an average of 90 basis points year-over-year for 2025-26, primarily due to affordability issues affecting lower-income consumers, although there is some mitigation from higher-income diners trading down for value [2][3]. - The report emphasizes a preference for defensive, value-driven leaders with operational agility, highlighting McDonald's and Domino's as favorable investments due to their resilient franchise revenue streams and scalable operating models [3][25]. Summary by Company McDonald's - McDonald's is recognized for its resilient revenue stream, primarily from its 95% franchised model, and its broad geographic footprint, which provides diversification [7][25]. - The target price for McDonald's is revised to USD 343.00, reflecting a 10.2% upside potential [4][46]. - The company is expected to benefit from a multi-layered pricing strategy and digital transformation initiatives, which are anticipated to enhance operational efficiency and customer engagement [25][26]. Domino's - Domino's is noted for its strong franchise model and predictable income streams, allowing for continued investment in growth and innovation [7][30]. - The target price for Domino's is set at USD 540.00, indicating a 15.7% upside potential [4][46]. - The company is expected to leverage its marketing and distribution expertise to drive international growth, particularly in markets like China and India [30][31]. Starbucks - Starbucks is undergoing tactical changes aimed at long-term turnaround, with a focus on enhancing brand value and customer experience [7][37]. - The target price for Starbucks is lowered to USD 84.00, reflecting a 3.1% upside potential [4][46]. - Despite challenges, the company is expected to stabilize its same-store sales declines and improve customer engagement through operational initiatives [37][49]. Shake Shack - Shake Shack is recognized for its differentiated brand equity and commitment to high-quality menu items, with a solid development pipeline expected to drive growth [7][42]. - The target price for Shake Shack is revised to USD 89.00, indicating a 6.9% upside potential [4][46]. - The company faces headwinds from competition and macroeconomic concerns, but it is positioned to capitalize on its brand strength and market opportunities [42][50].

Group 1 - Shake Shack Inc (NYSE:SHAK) stock has increased by 2% to $89.89 following an upgrade from Loop Capital to "buy" from "hold," with a price target set at $127, indicating a potential upside of 40% due to attractive valuation and sales growth [1] - The majority of firms are currently bearish on Shake Shack, with 12 out of 20 firms rating it as "hold" or worse, and short interest has risen by 7% over the past month, accounting for 10.7% of the stock's available float [2] - Shake Shack's stock has declined over 30% year-to-date, but it may experience its first daily gain in three sessions, testing a ceiling at the 20-day moving average after previously falling below this trendline [3] Group 2 - The stock's 50-day call/put volume ratio of 1.49 ranks in the 82nd percentile of annual readings, indicating that options traders are significantly more bullish than usual [4]

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Core Insights - Shake Shack Inc. (SHAK) has experienced a significant 146.6% increase over the past five years, but has recently faced a decline of 30.6% in the past month, underperforming the retail restaurant industry's 4.8% decline and the S&P 500's 7.5% drop [1][2][8] Financial Performance - In the fourth quarter of fiscal 2024, Shake Shack reported a year-over-year revenue increase of 14.8%, although it fell short of the Zacks Consensus Estimate [2] - The stock closed at $85.78, below its 52-week high of $139.89 and above its 52-week low of $77.50 [3] - Analysts have revised the Zacks Consensus Estimate for SHAK's 2025 EPS upward from $1.26 to $1.29 over the past 30 days, indicating a positive shift in sentiment [7] Revenue and Earnings Growth - Projections indicate a robust earnings growth of 40.2% in fiscal 2025 and a 22.9% increase in 2026, with revenue growth expected to be 17% year-over-year in 2025 and 12.7% in 2026 [9][10] - Shake Shack's same-shack sales growth improved by 1.6%, 4%, 4.4%, and 4.3% in the first, second, third, and fourth quarters of fiscal 2024, respectively, with a forecasted improvement of 3.1% in the first quarter of 2025 [12] Strategic Initiatives - The company is focusing on digital transformation, enhancing the Kiosk experience, and improving omnichannel adoption to drive guest engagement and higher average checks [11] - Shake Shack expanded its global presence by entering Canada, Israel, and Malaysia in 2024, and aims to open 35-40 new locations in 2025 [13] - A partnership with Delta Air Lines has been established to introduce Shake Shack's menu to in-flight dining, showcasing the brand's ability to extend its reach beyond traditional restaurant settings [14] Valuation and Investment Opportunity - The SHAK stock is currently trading below the industry average, with a forward 12-month price/sales ratio of 2.42X [15] - The recent stock decline presents a potential buying opportunity for long-term investors, supported by strong growth prospects and strategic initiatives [18] - Positive earnings estimate revisions and innovative partnerships signal growing investor confidence in Shake Shack's future performance [19][20]

Core Viewpoint - Shake Shack (SHAK) has experienced a significant decline of 24.3% over the past four weeks, but it is now positioned for a potential trend reversal as it enters oversold territory, with analysts predicting better earnings than previously expected [1] Group 1: Technical Indicators - The Relative Strength Index (RSI) is utilized to determine if a stock is oversold, with a reading below 30 indicating oversold conditions [2] - SHAK's current RSI reading is 27.77, suggesting that the heavy selling pressure may be exhausting, indicating a possible bounce back towards equilibrium [5] Group 2: Fundamental Indicators - There is a strong consensus among sell-side analysts that earnings estimates for SHAK have increased by 3.1% over the last 30 days, which typically correlates with price appreciation [6] - SHAK holds a Zacks Rank 2 (Buy), placing it in the top 20% of over 4,000 ranked stocks based on earnings estimate revisions and EPS surprises, further supporting the potential for a turnaround [7]

I am an Equity Analyst and Accountant specializing in restaurant stocks, with a solid 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 multiple segments, including QSR, fast casual, casual dining, fine dining, and family dining. We employ advanced analytical models and specialized valuation techniq ...

Shake Shack Inc. (SHAK) posted mixed fourth-quarter fiscal 2024 results, wherein earnings beat the Zacks Consensus Estimate while revenues missed the same. However, the top and bottom lines increased on a year-over-year basis.Find the latest earnings estimates and surprises on Zacks Earnings Calendar.The quarter’s performance improved year over year attributable to growing sales volume and enhanced operations. Furthermore, increased company-operated and licensed store openings on a global scale, accompanied ...