• Total Revenue: $320.9 million, a 10.5% increase year over year.
• System-wide Sales: $489.4 million.
• Restaurant-level Profit Margin: 20.7%, a 120 basis point improvement year over year.
• Restaurant Profit: $64.2 million, a 17.3% increase year over year.
• Adjusted EBITDA: $40.7 million, a 13.5% increase year over year.
• Net Income: $4.2 million or $0.10 per diluted share.
• Adjusted Pro Forma Net Income: $6.4 million or $0.14 per fully exchanged and diluted share.
• Cash and Cash Equivalents: $312.9 million at the end of the quarter.
• Same-Shack Sales Growth: 20 basis points.
• Traffic Decline: 4.6% due to weather and macroeconomic pressures.
• Check Growth: 4.8% with approximately 4% in-Shack menu price increase.
• New Shack Openings: 11 system-wide, including 4 company-operated Shacks.
• License Revenue: $11.1 million, an 11.1% increase year over year.
• License Sales: $179.6 million, a 10.4% increase year over year.
• Digital Mix: 38% of sales, up 130 basis points year over year.

• Warning! GuruFocus has detected 5 Warning Signs with PHAT.

Release Date: May 01, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Shake Shack Inc (NYSE:SHAK) achieved a record-high first-quarter total revenue and system-wide sales levels, with total revenue growing by 10.5% year over year.
• The company increased its restaurant-level profit margin by 120 basis points to 20.7%, marking the highest first-quarter margin since 2019.
• Shake Shack Inc (NYSE:SHAK) plans to open 45 to 50 company-operated Shacks this year, marking the largest class on record, and is on track to reduce build costs by at least 10% in 2025.
• The company is focusing on culinary innovation, introducing new menu items like the Dubai Chocolate Pistachio Shake, which received a phenomenal response.
• Shake Shack Inc (NYSE:SHAK) is leveraging digital advancements, such as new digital menu boards and guest recognition platforms, to improve operational efficiency and customer engagement.

Negative Points

• Traffic was down 4.6% in the quarter due to unfavorable weather and broader industry pressures, impacting overall sales.
• The company faced significant macroeconomic challenges, including elevated beef costs and wage inflation, which pressured margins.
• Same-Shack sales declined by approximately 1% in April, with continued headwinds from weather and macroeconomic factors.
• Shake Shack Inc (NYSE:SHAK) experienced outsized pressure in major markets like Los Angeles and New York City due to weather and macroeconomic challenges.
• Despite operational improvements, the company acknowledges a wider range of uncertainty around the macroeconomic backdrop and consumer spending, which could impact future performance.

Q & A Highlights

Q: Could you elaborate on the significant near-term opportunities that allowed you to boost your 2025 margin guide and your confidence in the multiyear outlook? A: Robert Lynch, CEO: This quarter highlighted our operational capabilities, particularly in managing labor models and supporting teams. Our new labor model from Q4 has positively impacted productivity. Our field leadership has shown agility in labor planning, despite restrictions. Long-term, we aim to maintain high guest service levels while exploring operational and supply chain improvements to enhance efficiency and productivity.

Q: Can you share early learnings from the rollout of new digital menu boards and the $9.99 chicken combo promo in drive-thrus? A: Robert Lynch, CEO: We've tested various models to improve our drive-thru experience, focusing on ordering processes and hospitality protocols. The new combo strategy in eight drive-thrus has improved ordering time, speed of service, accuracy, and guest satisfaction. We plan to expand this strategy across all drive-thrus and potentially other channels.

Q: What are the drivers behind your confidence in achieving low single-digit same-store sales growth for the year, despite tougher comparisons? A: Robert Lynch, CEO: We faced temporary headwinds like weather and macroeconomic challenges in Q1. Despite these, our premium positioning has outperformed value-oriented competitors. Our confidence stems from our menu strategy, culinary innovation, and LTOs. We're building an LTO calendar with innovation across burgers, sandwiches, sides, and beverages, aiming to drive traffic and mix.

Q: How do you balance the frequency of new product innovation or LTOs with operational efficiency? A: Robert Lynch, CEO: We focus on innovation that eases operations rather than complicates them. Our operators have transformed restaurant operations, and we aim to maintain efficiency. We manage innovation through equipment investments, new processes, and supply chain management. For example, we adapted the Dubai Chocolate Shake to simplify operations, allowing broader availability.

Q: Can you discuss the impact of macro headwinds on your long-term goal of 1,500 company-operated Shacks and any changes in identifying new US locations? A: Robert Lynch, CEO: Our strategy remains focused on market identification and analysis, which was in place before recent macroeconomic impacts. We continue to develop in legacy markets like New York and California while investing in growth areas like Arizona, Texas, and the Southeast. Our drive-thru model provides access to new real estate opportunities, supporting our expansion strategy.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.