Financial Data and Key Metrics Changes - Total revenue for Q2 was $356.5 million, exceeding guidance, with system-wide sales growing 13.7% year-over-year to $549.9 million [32] - Adjusted EBITDA grew by 24.8% year-over-year to $58.9 million, representing 16.5% of total revenue, marking the highest adjusted EBITDA level on record [39] - Net income attributable to Shake Shack Inc. was $17.1 million or $0.41 per diluted share, with adjusted pro forma net income at $19.5 million or $0.44 per fully exchanged and diluted share [40] Business Line Data and Key Metrics Changes - In the licensed business, revenue grew by 20.2% year-over-year to $13.3 million, with sales up approximately 16% to $206.7 million [32] - Company-operated Shack sales increased by 12.4% year-over-year to $343.2 million, with 13 new Shack openings [32] - Average weekly sales were $78,000, with 1.8% same Shack sales growth [33] Market Data and Key Metrics Changes - Traffic was down 70 basis points, but trends improved each month of the quarter, with positive traffic exiting the quarter and into July [33] - Same Shack sales growth was 1.8% in Q2, improving to 3.2% in July due to culinary innovation and marketing efforts [17][33] Company Strategy and Development Direction - The company focuses on three strategic priorities: driving same Shack sales, expanding globally, and improving profitability [10] - Shake Shack is committed to a culture of leadership and operational excellence, investing in team member development and kitchen innovations [12][14] - The company plans to open 45 to 50 company-operated Shacks in 2025, marking the largest class in company history [24] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in raising adjusted EBITDA guidance for the full year, despite ongoing industry challenges [9] - The company is optimistic about its culinary innovation pipeline and marketing strategies to drive traffic and sales growth [66][70] - Management highlighted the importance of operational improvements and supply chain optimizations to mitigate inflationary pressures [78] Other Important Information - Shake Shack raised over $100,000 to support communities affected by recent floods [8] - The company is on track to reduce build costs by at least 10% this year, despite global supply chain uncertainties [26] Q&A Session Summary Question: Can you elaborate on the margin front and labor productivity improvements? - Management noted significant improvements in labor productivity and operational efficiencies, contributing to expanded restaurant level margins by 190 basis points year-over-year [55][56] Question: What are the new learnings from the kitchen innovation lab? - Management shared that new kitchen equipment has improved throughput and service times, enhancing operational efficiency [59][60] Question: How will the new culinary calendar impact advertising and marketing? - The company plans to create awareness through paid media investments, focusing on culinary innovations and limited-time offers [66][67] Question: What has changed in the outlook that allowed for increased EBITDA guidance? - Management indicated strong performance in restaurant margins and confidence in continued strength, leading to an increase in EBITDA guidance [76] Question: How will marketing and culinary innovations be margin accretive? - The company expects new premium-priced menu items to drive sales and improve margins, alongside operational productivity [78][80]

Financial Data and Key Metrics Changes - Total revenue for Q2 was $356.5 million, exceeding guidance, with system-wide sales growing 13.7% year-over-year to $549.9 million [30] - Adjusted EBITDA grew by 24.8% year-over-year to $58.9 million, representing 16.5% of total revenue, marking the highest adjusted EBITDA level on record [36] - Net income attributable to Shake Shack Inc. was $17.1 million or $0.41 per diluted share, with adjusted pro forma net income at $19.5 million or $0.44 per fully exchanged and diluted share [37] Business Line Data and Key Metrics Changes - Company-operated Shack sales grew 12.4% year-over-year to $343.2 million, with 13 new Shack openings [30] - The license business saw revenue growth of 20.2% year-over-year to $13.3 million, with sales up approximately 16% to $206.7 million [30] - Restaurant level profit reached $82.2 million, or 23.9% of Shack sales, a 190 basis point improvement year-over-year [33] Market Data and Key Metrics Changes - Average weekly sales were $78,000, with 1.8% same Shack sales growth, improving to 3.2% in July [31][16] - Traffic was down 70 basis points, but trends improved each month of the quarter, with positive traffic exiting the quarter [31] - Culinary innovation contributed approximately one percentage point of growth to same Shack sales, driven by summer barbecue and merchandising improvements [32] Company Strategy and Development Direction - The company is focused on three strategic priorities: driving same Shack sales, expanding globally, and improving profitability [8] - Plans to open 45 to 50 company-operated Shacks in 2025, marking the largest class in company history [22] - The introduction of a culinary calendar with four main platforms per year aims to enhance marketing and product offerings [61] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in raising adjusted EBITDA guidance for the full year, despite ongoing industry headwinds [7] - The company is optimistic about its ability to navigate inflationary pressures and maintain strong cash flow [38] - Future growth is expected to be supported by a robust pipeline of culinary innovations and increased marketing investments [42] Other Important Information - The company raised over $100,000 to support communities affected by floods in Texas and North Carolina [6] - Shake Shack is now served on Delta flights across 13 domestic airports, receiving positive guest feedback [25] - The company is on track to reduce build costs by at least 10% this year despite global supply chain uncertainties [24] Q&A Session Summary Question: Can you elaborate on the incremental efficiencies seen in labor productivity? - Management highlighted improvements in recruiting, retention, and speed of service, attributing success to a new labor model and strong leadership [49][51] Question: What are the implications of the new culinary calendar on advertising and marketing? - The company plans to create awareness at the top of the funnel for limited-time offers and has built an 18-month culinary innovation calendar [61][65] Question: How will the marketing and culinary innovations be margin accretive? - Management indicated that new premium-priced items and operational efficiencies will help mitigate commodity inflation and drive margin growth [77][79] Question: How is the company managing the balance between product innovation and operational efficiency? - The company conducts operational tests on new menu items to ensure they do not disrupt productivity and service quality [104]