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]