Shake Shack (SHAK) Q2 2024 earnings summary

Executive summary

• Achieved record second quarter results with 16.5% revenue growth year-over-year, 4% Same-Shack Sales growth, and 27.4% Adjusted EBITDA growth, marking the highest margins since 2019.

• Opened 12 new company-operated Shacks and 11 licensed Shacks, including the first in Canada and three drive-thrus, with strong initial sales performance.

• System-wide sales increased 13.5% to $483.7 million, with digital sales up 20.9% to $105.1 million, representing 34.4% of Shack sales.

• CEO Rob Lynch outlined three strategic priorities: driving Same-Shack Sales and brand awareness, expanding global unit growth, and improving profitability through productivity.

• Continued positive Same-Shack Sales for the 14th consecutive quarter, with July up 4.1%.

Financial highlights

• Total revenue reached $316.5 million, up 16.5% year-over-year; system-wide sales hit $483.7 million, up 13.5%.

• Adjusted EBITDA grew 27.4% to $47.2 million (14.9% of revenue), and free cash flow reached a record $20.6 million.

• Restaurant-level profit margin expanded 100 basis points to 22%, the highest since 3Q 2019.

• Net income attributable to the company was $9.7 million ($0.23 per diluted share); adjusted pro forma net income was $12.1 million ($0.27 per share).

• Food and paper costs decreased 120 basis points year-over-year to 27.8% of Shack sales; labor costs (excluding one-time items) were 28.2% of Shack sales, down 50 basis points.

Outlook and guidance

• FY 2024 revenue guidance: $1.24–$1.25 billion (14–15% growth); Adjusted EBITDA guidance: $165–$170 million (25–29% growth).

• Restaurant-level profit margins expected at 20.6–21% for the year, with 70–110 basis points of expansion.

• Guidance for 40 company-operated and 40 licensed new Shack openings in 2024.

• Q3 revenue guidance: $311.6–$317 million, with 6–7 company-operated and 7 licensed openings.

• Management expects continued growth through new Shack openings and digital sales expansion.