Shake Shack 2Q15 Earnings Call Notes

Revenue at 48.5m

“Total revenue grew 74.7% to $48.5 million, including a 12.9% increase in same same-Shack sales on a calendar basis. Shack-level operating profit, a non-GAAP measure, increased 110.9% to $14.1 million, a 30.3% Shack-level operating profit margin.”

Opening shacks in the UK and Moscow

“On the international front, during the quarter we opened our second Shack in the U.K., located on the Street, in the heart of the bustling Westfield Stratford City shopping centre; as well as our third Shack in Moscow, Russia, located in Avia Park, Moscow’s newest premier shopping and dining complex.”

Average weekly sales per location $102k

“Average weekly sales for domestic company-operated Shacks increased 7.4% to $102,000 for the second quarter of 2015 from $95,000 in the same quarter last year, primarily driven by menu price increases, positive shifts in mix from menu innovation and strong performance from several Shacks opened in the second half of 2014, including those Shacks in Las Vegas and Chicago.”

Targeting 2.8-3.2m unit economics for Shacks

“We remain proud of the strength of our current Shack of economics. However, long term we’re still targeting AUVs in the $2.8 million to $3.2 million range for new Shacks. And given some of the cost pressures, I mentioned earlier, Shack-level operating profit margins in the 18% to 22% range. ”

Fine dining heritage

“Our team continues to embrace our fine dining heritage, as we develop new products around the core menu.”

Labor increase can take a toll on the whole industry

” the first price increase will come in December — the first labor increase will come in December. There’s no doubt it can take a toll on the entire industry. We’ve always paid above minimum wage and we’re well-positioned to increase that as we need to. And we’re going to always, as we said, lead with taking care of our team. We do believe, as we’ve said, when you look at the results certainly of this first half of the year that have been so strong, we do expect deleverage on the labor line over these coming years as minimum wage goes up.”

We’ve taken 6% price this year

“we’ve taken 6% price this year. And our traffic is up, our sales are up, we’ve continued to find ways to menu innovation to drive sales. And that’s going to be our focus. ”

Long term goal of 450 restaurants domestically

“as we head towards our goal of domestic Shacks of 450 restaurants over the long-term”

Next year we may not have that IPO hype when we open a restaurant

“Something I think you should also think about too is the IPO lift that we talked about at the existing Shack could have an impact on some of the new Shacks we’re opening now as well. People have never heard of it. Maybe it’s another region and now they’re saying, gosh, I’ve heard the news on Shake Shack and it could be probably over there. So we think its conservative to go with the $2.8 million to $3.2 million that we’ve always talked, because next year we may not have IPO hype. We won’t have that IPO hype”