May 3, 2019
Shake Shack Inc. is planning additional investments and will test new digital channel opportunities amid a solid quarterly financial performance.
In a May 2 conference call, CEO Randall Garutti said the company is seeing strong results from recent digital initiatives and will focus on making that a more important part of its business.
"The expansion of our business in new digital channels presents a real opportunity for us to expand that concept of community and to engage with our guests and fans in a much broader and personalized basis," he said during the call.
He said the company also plans to test more pickup shells over the next few months "where we’ve had a higher proportion of digital sales and the new Shacks are being designed with an omnichannel experience top of mind," Garutti said.
He said corporate leaders are pleased with the positive impact digital has had across all channels, with all channels delivering growth as a percentage of sales and delivering a higher average check.
Company officials noted operating expenses increased by 90 basis points to 12.1% in part due to digital growth leading to more delivery commissions as well as higher overall marketing spend.
Shake Shack reported that total year-over-year revenues increased 33.8% to $132.6 million during the first quarter ending March 27, prompting the company to increase its revenue and same-store sales expectations for the year.
"Our performance was supported by the strength from new openings, the holiday shift and warm weather conditions across a number of key markets early in the quarter and the continued growth of our digital channels, where we see significant ongoing opportunities," Garutti said during the call.
Shake Shack raised its year-end revenue expectations from $570–$576 million to $576–$582 million, and it now expects same-store sales to increase from 1%–2%, as opposed to a previous forecast of flat sales.
Highlights included:
Same-store sales increased 3.6%.Shack system-wide sales increased 33.5% to $195.2 million.Operating income was $5.2 million, or 3.9% of total revenue and included the impact from costs associated with Project Concrete and other one-time items that totaled $0.5 million and resulted in an operating income decrease of 20.8% in the quarter.Net income was $3.6 million and adjusted EBITDA, a non-GAAP measure, increased 10.4% to $17.8 million.The company saw 12 Shack openings system-wide, including five domestic company-operated Shacks and seven licensed units."We also plan to open 16 to 18 net new licensed Shacks, with our international growth focused on Asia and our new markets of mainland China, Singapore, the Philippines and Mexico," Garutti said.
Topics: Mobile Apps, Mobile Payments, Restaurants
Companies: Shake Shack
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