News

Shake Shack turns in solid Q4, launches cookbook

March 6, 2017

Shake Shack reported this month that revenue and sales were up substantially for the fourth quarter and the entire year, ending Dec. 28, 2016.

Total revenue increased 43.5 percent, to $73.3 million, and sales increased 43.8 percent to $70.9 million during Q4. For the year, the chain reported total revenue increased 40.9 percent to $268.5 million and shack sales increased 41.6 percent to $259.4 million.

"I am proud of what our team has achieved in our second full year as a public company,” Randy Garutti, CEO of Shake Shack, said in a press release. "I’m especially pleased given the challenging industry backdrop in retail and restaurants. And, we achieved all of this while furthering our commitment to growing in premier locations, and building an even better team member and guest experience that fosters the long-term strength of the Shake Shack brand for years to come."

Q4 highlights:

• Same-Shack sales increased 1.6 percent.
• Shack-level operating profit, a non-GAAP measure, increased 29.9 percent to $18.0 million, or 25.4 percent  of Shack sales.
• Net income was $3.9 million, or $0.15 per diluted share.
• Adjusted EBITDA, a non-GAAP measure, increased 31.6 percent to $11.4 million.
• Adjusted pro forma net income, a non-GAAP measure, increased 11.6 percent to $3.3 million, or $0.09 per fully exchanged and diluted share.
• Nine net system-wide Shack openings, including six domestic company-operated Shacks and three net licensed Shacks.

Financial highlights for the fiscal year 2016:

• Total revenue increased 40.9 percent to $268.5 million.
• Shack sales increased 41.6 percent to $259.4 million.
• Same-Shack sales increased 4.2 percent.
• Shack-level operating profit, a non-GAAP measure, increased 38.6 percent to $73.3 million, or 28.3 percent of Shack sales.
• Net income was $12.4 million, or $0.53 per diluted share.
• Adjusted EBITDA, a non-GAAP measure, increased 35.7 percent to $50.2 million.
• Adjusted pro forma net income, a non-GAAP measure, increased 39.2 percent to $16.8 million, or $0.46 per fully exchanged and diluted share.
• Thirty net system-wide Shack openings, including 20 domestic company-operated Shacks and 10 net licensed Shacks, representing a 35.7 percent increase in system-wide Shack count (net of closures).

Development highlights

During the quarter, the company opened six domestic company-operated Shacks, which included its first Shack in Houston at The Galleria, a Shack in New York's Penn Station, and a new free-standing model Shack in Delaware across from the Christiana Fashion Center, as well as additional Shacks in the California, Georgia, and DC markets, according to the release.

Additionally, the company opened four international licensed Shacks during the quarter, including its second Shack in Korea in the Cheongdam neighborhood, as well as additional Shacks in the United Kingdom and Middle East markets, and a domestic licensed Shack at the Wells Fargo Center in Philadelphia.

Subsequent to the end of the quarter, the company opened its first Shack in Detroit, Michigan, a third Shack in Connecticut and a fourth Shack in the California market in Century City. The company also opened two licensed Shacks in London at Canary Wharf and Victoria Nova, as well as five additional Shacks in the Middle East.

2017 outlook

For the fiscal year ending Dec. 27, 2017, the company is providing the following financial outlook:

• Raising total revenue guidance to between $349 million and $353 million (vs. $348 million and $352 million).
• Same-Shack sales growth between 2 and 3 percent, which includes approximately 1.5 percent to 2 percent of menu price increases taken in early January and nominal traffic and mix increases.
• Increasing previous development plan guidance to between 22 and 23 (vs. between 21 and 22) new domestic company-operated Shacks (with average annual sales volumes of at least $3.2 million and Shack-level operating profit margins of at least 21 percent).
• Increasing to 11 net new licensed Shacks to be opened in fiscal 2017 (vs. 10 net).
• Shack-level operating profit margin between 26.5 percent and 27.5 percent.
• Increasing general and administrative expenses to between $38 million and $40 million (vs. $37 million to $39 million).
• Increasing depreciation expense to approximately $22 million (vs. $21 million).
• Interest expense between $1.6 million and $2.0 million.
• Adjusted pro forma effective tax rate to between 40 percent and 41 percent

Cookbook launching in May

Garutti and Shake Shack Culinary Director Mark Rosati have created a cookbook, "Shake Shack: Recipes & Stories," which will be out May 16. Customers who pre-order the book willreceivea voucher for a free ShackBurger.