Shake Shack(SHAK)2024-10-31 20:07Sales 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]