Operations

Revenue up nearly 15% at Shake Shack

Photo: Shake Shack

October 30, 2024

Shake Shack posted a solid Q3 earnings report Wednesday, featuring a revenue growth of 14.7% and same-store sales growth of 4.4%. It also saw a 28% jump in adjusted EBITDA and opened eight company-operated and nine licensed Shacks, according to a company press release.

"We are proud of the results our team members delivered this quarter, as we grew total revenue 14.7% with 4.4% same-Shack sales growth and positive traffic," CEO Rob Lynch wrote in a letter to shareholders. "We continue our strong momentum into October, as our marketing and operational initiatives continue to take hold.

Chief Financial Officer Katie Fogertey told shareholders that the results marked the ninth consecutive quarter of positive same-store sales growth and restaurant-level profit margin expansion.

"With strong sales and operational improvements, we grew Restaurant-level profit margin by 60 bps year-over-year and Adjusted EBITDA margin by 140 bps year-over-year," she wrote in the letter. "Third quarter also marks the highest 3Q Restaurant-level profit margin and Adjusted EBITDA margin since FY2019. We are building on our strong momentum with our 4Q FY2024 guide for approximately 220 bps year-over-year improvement in our Restaurant-level profit margin and continued Adjusted EBITDA margin expansion, both of which are likely to significantly surpass 4Q2019 levels."

The why behind the numbers

During Q3, Shake Shack invested in marketing strategies and programs to boost engagement and brand awareness, which led to some of its highest brand awareness levels on record and is fueling strong sales and profitability growth. It also introduced a new labor model, providing tailored schedules for team members to better serve our guests.

"We were able to execute the highest sales per labor hour since 2019 last quarter, and labor costs per store week declined year-over-year despite positive traffic and wage inflationary pressures," Fogertey said.

Through streamlined operations and new ways of flowing food through the kitchens, as well as improved data reporting, the chain also reduced wait times to the lowest levels in over five years.

Shake Shack plans to open 75 Shacks in 2024. Next year, it will add up to 85, of which 45 will be company-operated across a variety of formats, including core and drive-thru.