Shake Shack beats profit expectations as sales trends improve each month
By Tomi Kilgore
Revenue at the burger chain rises a little less than expected, but full-year growth outlook is nudged higher
Shake Shack Inc. on Thursday reported first-quarter profit that beat expectations and nudged up its full-year outlook, as improved margins helped offset revenue and same-Shack sales that came up a bit short.
"While we faced weather headwinds in January and throughout the quarter, our trends steadily improved with each month and into the second quarter," Chief Executive Randy Garutti said on the post-earnings call with analysts, according to a FactSet transcript.
The burger chain's stock (SHAK) was little changed in premarket trading.
The burger chain swung to net income of $2.04 million, or 5 cents a share, from a loss of $1.53 million, or 4 cents a share, in the same period a year ago. Excluding nonrecurring items, adjusted earnings per share of 13 cents topped the FactSet consensus of 10 cents.
Restaurant-level profit margin improved 1.2 percentage points to 19.5% of Shack sales.
Revenue grew 14.7% to $290.5 million, but was below the FactSet consensus of $291.0 million.
Same-Shack sales, or sales of restaurants open for at least two years, increased 1.6% but missed the FactSet consensus of 2% growth.
The miss comes after rival burger chains McDonald's Corp. (MCD), Burger King (QSR) and Wendy's Co. (WEN) all reported this week same-restaurant sales that rose but missed expectations.
For 2024, the company nudged up its revenue-growth outlook to 12%-15% from 11%-15% and its guidance for operating profit margin to 20.2%-21% from 20%-21%.
The company said it has been focusing on cutting wait times for customers. And that's been working, Garutti said, with more than half of Shake Shack restaurants "improving their ticket times by at least 15 seconds in the first quarter as compared to last year."
The stock has soared 39.4% year to date through Wednesday, while the S&P 500 index SPX has gained 5.2%.
-Tomi Kilgore
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05-02-24 0916ET
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