Shake Shack(SHAK)2021-05-07 02:38Financial Data and Key Metrics Changes - Total revenue for Q1 2021 was $155.3 million, an increase of 8.5% year-on-year, with Shack sales at $150.7 million, growing 9.1% year-on-year [8][23] - Average weekly sales improved to $64,000 compared to $62,000 in Q4 2020, with March average weekly sales at $68,000 and $69,000 in fiscal April [8][24] - Shack-level margin was 15% for Q1, improving to just under 19% by the end of March [9][31] Business Line Data and Key Metrics Changes - Same-Shack sales increased by 5.7% in Q1 and surged by 86% in fiscal April compared to 2020 [9][25] - Average weekly sales for the 2021 class of Shacks opened was over $79,000, significantly higher than the system average [12] - The company opened 10 domestic company-operated Shacks in Q1 and plans to open between 35 and 40 new Shacks in 2021 [10][11] Market Data and Key Metrics Changes - Suburban Shacks showed a nearly flat performance compared to 2019, while urban Shacks were down 25% in March and 27% in April compared to 2019 [27][28] - Internationally, the company opened two new Shacks in the Middle East and six additional openings in Asia during Q1 [13][15] - The UK Shacks began reopening as lockdown restrictions eased, and Shacks in China experienced strong sales [15] Company Strategy and Development Direction - The company is focused on opening and operating new Shacks while enhancing digital transformation and guest experience [10] - Plans to test drive-throughs with potential for up to eight locations by 2022, indicating a shift towards more convenient service options [12] - The company aims to expand its license operations significantly, targeting 15 to 20 new license Shacks in 2021 and 20 to 25 in 2022 [15] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about recovery trends as COVID restrictions ease, with a focus on rebuilding in-Shack sales [7][28] - The company anticipates total revenue for Q2 to be between $174 million and $183 million, with same-Shack sales expected to increase in the mid-40s to 50% range [29] - Management acknowledged challenges in urban markets, particularly in high-volume areas, but remains confident in the overall recovery trajectory [28][70] Other Important Information - The company launched a new limited-time menu and is focusing on enhancing its beverage offerings, which have seen increased sales [19][20] - The company published its annual Stand For Something Good report, outlining ESG priorities and diversity goals [21] - Tara Comonte, the President and CFO, announced her departure, with a search for her replacement underway [38][39] Q&A Session Summary Question: Store openings and comp base normalization - Management noted that new Shacks opened at an average of $79,000 weekly, indicating strong performance despite pandemic challenges [43][44] Question: Labor environment and hiring challenges - Management acknowledged staffing challenges but reported no material impact on operations, emphasizing their commitment to investing in team members [49][50] Question: Urban Shack performance and sales deceleration - Management explained that slight deceleration in urban sales is due to a small comp base and specific Shack closures impacting overall performance [51][52] Question: Q2 comp guidance and average weekly sales - Management refrained from breaking down guidance further, citing high uncertainty in the current operating environment [58] Question: Confidence in growth and site openings - Management expressed confidence in site availability and brand strength, while also noting potential cost inflation in construction materials [76][77]