Shake Shack (SHAK) Q4 2023 earnings summary

Executive summary

• FY2023 passed 500 locations, exceeded $1B in Shack sales, and expanded Shack-level operating profit margin; 82 net new system-wide locations brought the footprint to 518.

• Q4 same-Shack sales rose 2.8%, including 1.4% traffic growth and 1.4% price/mix growth; system-wide sales increased 21.4% to $442.1M.

Financial highlights

• FY2023 total revenue was $1,087.5M; Shack sales grew 20.4% to $1,046.8M and licensing revenue grew 30.4% to $40.7M YoY.

• Operating income was $5.9M versus an operating loss of $26.9M in FY2022; net income was $21.0M versus a restated net loss of $23.1M.

• Diluted EPS was $0.48 versus a restated loss of $0.54; income tax benefit was $4.0M, with a (23.6)% effective tax rate.

• Operating cash flow was $132.1M, up from $76.7M; net cash used in investing was $132.3M and in financing was $5.7M.

Outlook and guidance

• Targeting ~40 new domestic Company-operated Shacks in 2024; long-term potential cited for at least 450 domestic Company-operated locations, with no timeframe specified.

• 2024 international licensing plans include first openings in Kuala Lumpur, Tel Aviv, and Toronto; China macro pressures and Middle East geopolitical conditions could affect openings and sales.

• FY2023 average new-Shack investment was ~$3.0M gross and ~$2.6M net of landlord allowances, up ~8.3% YoY; FY2023 was expected to be the high-water mark for build costs.