Share This Post

Business Wire

Shake Shack Announces Fourth Quarter and Fiscal Year 2020 Financial Results

– Suburban Same-Shack Sales Improved From Down 16% in the Third Quarter 2020, to Nearly Flat in the Fourth Quarter 2020, Exiting the Fiscal Year with Positive Year-on-Year Growth

– Sales for Company-Owned Digital Channels Continued Strong Growth Through the Third Week of Fiscal February 2021, up ~300% Year to Date Compared to Prior Year

– 35-40 New Domestic Company-Operated Shack Openings Planned for 2021 with Unit Development Targeted to Accelerate to 45-50 Openings in 2022

NEW YORK–(BUSINESS WIRE)–Shake Shack Inc. (“Shake Shack” or the “Company”) (NYSE: SHAK), today reported financial results for the fourth quarter and the fiscal year ended December 30, 2020, periods that included 14 and 53 weeks, respectively, as fiscal 2020 contained an additional operating week compared to fiscal 2019.

Randy Garutti, Chief Executive Officer of Shake Shack, stated, “As we close the chapter on 2020, I’m so grateful and proud of the way our Shack family has overcome the obstacles that came our way, and led the continued recovery of our business while supporting each other and our communities. With much of the country still under varying degrees of lockdown, we’re pleased to report revenue in the fourth quarter of $157.5 million, with same-Shack sales improving to down 17.4% compared to down 31.7% in the third quarter 2020. Looking at fiscal 2021, we were encouraged to see recovery momentum continue with same-Shack sales in fiscal January 2021 down only 5%, and with suburban Shacks delivering growth of 8% compared to last year. The first few weeks in fiscal February have been impacted by the cold weather and snowstorms across many parts of the country, with same-Shack sales down around 16% through the 17th of the fiscal month. We’re just a few short weeks away from turning the dial on a full year of COVID impact, and beginning to compare against the hardest hit sales months of last year. Looking forward, our digital channels will continue to represent a sizeable opportunity for us to acquire new guests and we are focused on exciting new limited-time menu offerings and culinary collaborations.”

Garutti continued, “We are excited to accelerate unit growth and will be targeting between 35 and 40 new domestic Company-operated Shacks this year, while ramping up to 45 to 50 in fiscal 2022, representing in total, about a 45% increase to our year-end 2020 domestic Company-operated Shack count over the next two years. We believe we are uniquely positioned to exit this challenging period stronger and with greater opportunity than where we started. We have laid out a robust and accelerated development pipeline for fiscal 2021 and 2022, which will capture great real estate opportunities while encompassing our new Shack Track, curbside and drive-thru experiences. Additionally, we expect to open 15 to 20 new licensed Shacks in fiscal 2021 and 20 to 25 new licensed Shacks in fiscal 2022.”

Financial Highlights for the Fourth Quarter 2020:

  • Total revenue in the fourth quarter 2020 increased 4.0% to $157.5 million versus the same period last year, showing sequential improvement when compared to a decline of 17.3% in the third quarter 2020. This increase is inclusive of the favorable impact of the 53rd week in the fourth quarter 2020, which resulted in incremental revenue of $11.1 million. Excluding the 53rd week, total revenue in the fourth quarter 2020 decreased 3.3%.
  • Shack sales in the fourth quarter 2020 increased 4.6% to $152.5 million versus the same period last year, showing sequential improvement when compared to a decline of 17.1% in the third quarter 2020. This increase is inclusive of the favorable impact of the 53rd week in the fourth quarter 2020, which resulted in incremental Shack sales of $10.7 million. Excluding the 53rd week, Shack sales in the fourth quarter 2020 decreased 2.8%.
  • Same-Shack sales1 continued to sequentially improve every month since fiscal April 2020, down 17.4% in the fourth quarter 2020 versus the same period last year, compared to down 31.7% in the third quarter 2020. In fiscal January 2021, same-Shack sales continued to recover, with a decline of 5% versus the same period last year. During the first three weeks of fiscal February 2021, same-Shack sales decreased to down 16%, impacted by severe winter weather. Within same-Shack sales:

    • Suburban same-Shack sales were approximately flat during the fourth quarter 2020 versus the same period last year, compared to down 16% in the third quarter 2020, improving to up 8% in fiscal January 2021. During the first three weeks of fiscal February 2021, suburban same-Shack sales decreased to down 4%.
    • Urban same-Shack sales were down 31% during the fourth quarter versus the same period last year, compared to down 43% in the third quarter 2020, improving to down 17% in fiscal January. During the first three weeks of fiscal February 2021, urban same-Shack sales decreased to down 27%. Furthermore, Manhattan was down 49% during the fourth quarter 2020 versus the same period last year, compared to down 60% in the third quarter 2020, and improving to down 38% in fiscal January 2021.
  • Licensed revenue in the fourth quarter 2020 decreased 10.6% to $5.0 million versus the same period last year, showing sequential improvement when compared to a decline of 23.8% in the third quarter 2020. This decrease is inclusive of the favorable impact of the 53rd week in the fourth quarter 2020, which resulted in incremental licensed revenue of $0.4 million. Excluding the 53rd week, licensed revenue in the fourth quarter 2020 decreased 17.7%.
  • Shack system-wide sales in the fourth quarter 2020 increased 1.4% to $238.3 million versus the same period last year, showing sequential improvement when compared to down 18.4% in the third quarter 2020. This increase is inclusive of the favorable impact of the 53rd week in the fourth quarter 2020, which resulted in incremental Shack system-wide sales of $17.7 million. Excluding the 53rd week, Shack system-wide sales in the fourth quarter 2020 decreased 6.2%.
  • Operating loss in the fourth quarter 2020 was $12.2 million, compared to operating income of $0.5 million in the same period last year, showing a decline when compared to an operating loss of $6.8 million in the third quarter 2020, as we ramped up general and administrative expenses in support of anticipated accelerated Shack growth in fiscal 2021 and thereafter. This operating loss includes a non-cash impairment charge of $6.5 million related to one Shack and expansion space of the Company’s home office.
  • Shack-level operating profit2, a non-GAAP measure, decreased 17.9% to $24.4 million, or 16.0% of Shack sales in the fourth quarter 2020, versus a Shack-level operating profit of $18.7 million, or 14.8% of Shack sales in the third quarter 2020, inclusive of a $0.9 million reduction in Occupancy and related expenses due to the closure of our Shack in Penn Station.
  • Net loss was $20.3 million and adjusted EBITDA2, a non-GAAP measure, was $9.2 million in the fourth quarter 2020, compared to net loss of $2.1 million and adjusted EBITDA of $14.8 million in the same period last year.
  • Net loss attributable to Shake Shack Inc. was $19.4 million and adjusted pro forma net loss2, a non-GAAP measure, was $1.3 million, or a loss of $0.03 per fully exchanged and diluted share in the fourth quarter 2020, compared to net loss attributable to Shake Shack Inc. of $2.1 million, adjusted pro forma net income of $2.2 million, or $0.06 per fully exchanged and diluted share, in the same period last year.
  • The Company opened 13 net system-wide Shacks in the fourth quarter 2020, comprised of 8 domestic Company-operated Shacks and 5 net licensed Shacks. As of the end of the fourth quarter there were 183 Company-operated domestic Shacks and 128 global licensed Shacks compared to 163 and 112, respectively, versus the prior year.
  • Cash and marketable securities on hand was $183.8 million as of December 30, 2020.

Financial Highlights for the Fiscal Year 2020:

  • Total revenue for the fiscal year ended December 30, 2020 decreased 12.1% to $522.9 million versus the prior year. This decrease is inclusive of the favorable impact of the 53rd week in the fourth quarter 2020, which resulted in incremental revenue of $11.1 million. Excluding the 53rd week, total revenue in fiscal year 2020 decreased 13.9%.
  • Shack sales for the fiscal year ended December 30, 2020 decreased 11.9% to $506.3 million versus the prior year. This decrease is inclusive of the favorable impact of the 53rd week in the fourth quarter 2020, which resulted in incremental Shack sales of $10.7 million. Excluding the 53rd week, Shack sales in fiscal year 2020 decreased 13.7%.
  • Same-Shack sales1 decreased 27.8%, for the fiscal year ended December 30, 2020 versus the prior year.
  • Licensed revenue for the fiscal year ended December 30, 2020 decreased 16.9% to $16.5 million versus the prior year. This decrease is inclusive of the favorable impact of the 53rd week in the fourth quarter 2020, which resulted in incremental licensed revenue of $0.4 million. Excluding the 53rd week, licensed revenue in fiscal year 2020 decreased 18.9%.
  • Shack system-wide sales decreased 13.0% to $778.9 million, versus the prior year. This decrease is inclusive of the favorable impact of the 53rd week in the fourth quarter 2020, which resulted in incremental Shack system-wide sales of $17.7 million. Excluding the 53rd week, Shack system-wide sales in the fiscal year 2020 decreased 15.0%.
  • Operating loss for the fiscal year ended December 30, 2020 was $43.9 million compared to operating income of $25.7 million versus the same period last year. This operating loss includes a non-cash impairment charge of $7.6 million related to two Shacks and the expansion space of the Company’s home office.
  • Shack-level operating profit2, a non-GAAP measure, decreased 44.2% to $71.4 million, or 14.1% of Shack sales in fiscal year 2020, inclusive of a $0.9 million reduction in Occupancy and related expenses due to the closure of our Shack in Penn Station.
  • Net loss was $45.5 million and adjusted EBITDA2, a non-GAAP measure, was $22.7 million in fiscal year 2020, compared to net income of $24.1 million and adjusted EBITDA of $81.8 million in the same period last year.
  • Net loss attributable to Shake Shack Inc was $42.2 million and adjusted pro forma net loss2, a non-GAAP measure, was $22.3 million, or a loss of $0.56 per fully exchanged and diluted share in fiscal year 2020, compared to net income attributable to Shake Shack Inc. of $19.8 million, adjusted pro forma net income of $27.4 million, or $0.72 per fully exchanged and diluted share, in the same period last year.
  • The Company opened 36 net system-wide Shacks, comprised of 20 domestic Company-operated Shacks and 16 net licensed Shacks. In the fourth quarter 2020, the Company was notified by its landlord of the early termination of the Company’s lease at Penn Station, NY. The termination was due to the landlord’s plans to redevelop the Long Island Rail Road Concourse following the successful completion of the East End Gateway and opening of the Moynihan Train Hall. This closure is effective as of fiscal February 2021

1 Fiscal 2020 excludes the impact of the 53rd week. Same-Shack sales compares the 52 weeks from December 26, 2019 through December 23, 2020 to the 52 weeks from December 27, 2018 through December 25, 2019. In order to compare like-for-like periods for fiscal 2021, same-Shack sales will compare the 52 weeks from December 31, 2020 through December 29, 2021 to the 52 weeks from January 2, 2020 through December 30, 2020.

2 Shack-level operating profit, adjusted EBITDA and adjusted pro forma net income (loss) are non-GAAP measures. Reconciliations of Shack-level operating profit to operating income (loss), adjusted EBITDA to net income (loss), and adjusted pro forma net income (loss) to net income (loss) attributable to Shake Shack Inc., the most directly comparable financial measures presented in accordance with GAAP, are set forth in the schedules accompanying this release. See “Non-GAAP Financial Measures.”

Fourth Quarter 2020 Review

Total revenue, which includes Shack sales and licensing revenue, increased 4.0% from the fourth quarter of 2019 to $157.5 million in the fourth quarter of 2020. This increase is inclusive of the favorable impact of the 53rd week in the fourth quarter 2020, which resulted in incremental revenue of $11.1 million. Excluding the 53rd week, total revenue in the fourth quarter 2020 decreased 3.3%. Total revenue has shown steady and significant improvement when compared to a decline of 17.3% during the third quarter.

Shack sales for the fourth quarter of 2020 were $152.5 million, an increase of 4.6% from the same quarter last year, inclusive of the favorable impact of the 53rd week in the fourth quarter 2020, which resulted in incremental Shack sales of $10.7 million. Excluding the 53rd week, Shack sales in the fourth quarter 2020 decreased 2.8%. This 2.8% decrease was due to a decline in same-Shack sales due to the impact from the COVID-19 pandemic, partially offset by the opening of 20 new domestic Company-operated Shacks between December 25, 2019 and December 30, 2020.

Same-Shack sales improved across all regions on a sequential basis in the fourth quarter 2020 when compared to the third quarter 2020, with performance driven by increases in in-Shack dining in both urban and suburban Shacks, combined with high levels of digital sales. Most notably, same-Shack sales improved sequentially in each of the last nine months of fiscal 2020, and through fiscal January 2021. During the fourth quarter of fiscal 2020, same-Shack sales were down 17.4% compared to the same period last year, with the Company’s urban Shacks down 31% and suburban Shacks approximately flat compared to the same period last year. Similar to prior years, in mid-December menu prices increased approximately 2% on average across all Company-operated Shacks. The Company’s fourth quarter 2020 same-Shack sales reflect sequential improvement from the prior quarter, during which same-Shack sales were down 31.7%, with urban Shacks down 43% and suburban Shacks down 16%. Subsequent to the fourth quarter of 2020, in fiscal January 2021, same-Shack sales were down 5%, with the Company’s urban Shacks down 17% and suburban Shacks up 8% compared to the same period last year. In the beginning of fiscal February 2021, trends were impacted by cold weather and snowstorms across many parts of the country, causing more than 130 full or partial lost operating days from Shack closures. Through the first three weeks of fiscal February 2021, same-Shack sales were down 16%, with the Company’s urban Shacks down 27% and suburban Shacks down 4% compared to the same period last year. As expected, urban locations are still acutely impacted by the pandemic and suburban locations are recovering to pre-COVID sales levels quicker. New York City, particularly Manhattan, continues to lag other regions and the Company expects this to be an ongoing trend until offices return and business and tourism traffic fully recover.

Two domestic Company-operated Shacks were temporarily closed as of the end of the fourth quarter 2020. As of the end of the fourth quarter 2020, approximately half of the Company’s domestic Company-operated Shacks had open dining rooms with varying capacity restrictions, with the majority of Shacks also utilizing outdoor patio space, whenever possible.

During the fourth quarter of 2020, total digital sales, including orders placed on the Shake Shack app, website and third party delivery platforms, represented 59% of total Shack sales, with this trend continuing through the start of fiscal 2021, with digital sales mix at 64% in fiscal January 2021 and 63% during the first three weeks of fiscal February 2021. In fiscal 2021 through the first three weeks of fiscal February 2021, Company-owned app and web sales increased approximately 300% compared to the same period in the prior year. The Company has added over 2 million first-time purchasers to the Company-owned app and web channels between mid-March 2020 and the end of fiscal January 2021.

The following table presents fiscal monthly information about the Company’s current trends in Shack sales.

 

Fiscal 2020

 

Fiscal 2021

 

First
Quarter

 

Second
Quarter

 

Third
Quarter

 

Fourth
Quarter

 

First

Quarter

(dollar amounts in

thousands)

Mar 25

 

Apr 22

 

May 20

 

Jun 24

 

Jul 22

 

Aug 19

 

Sep 23

 

Oct 21

 

Nov 18

 

Dec 30(1)

 

Jan 27

 

Feb 17(2)

Average weekly sales

$56

 

$32

 

$50

 

$52

 

$56

 

$59

 

$61

 

$62

 

$62

 

$62

 

$63

 

$60

Total year-over-year

sales growth (decline)

(11)%

 

(56)%

 

(32)%

 

(32)%

 

(23)%

 

(20)%

 

(10)%

 

(5)%

 

(3)%

 

18%

 

(6)%

 

(2)%

Same-Shack sales %(3)

(29)%

 

(64)%

 

(42)%

 

(42)%

 

(39)%

 

(34)%

 

(23)%

 

(21)%

 

(17)%

 

(15)%

 

(5)%

 

(16)%

_________________

(1)

  When excluding the impact of the 53rd week, total year-over-year sales were down 1%. 

(2)

  Represents the first three weeks of fiscal February 2021.

(3)

  “Same-Shack sales” or “SSS” represents Shack sales for the comparable Shack base, which is defined as the number of domestic Company-operated Shacks open for 24 full fiscal months or longer. For days that Shacks were temporarily closed, the comparative 2019 period was also adjusted. For fiscal December, same-Shack sales excludes the impact of the sixth week and compares the five weeks from November 19, 2020 through December 23, 2020 to the five weeks from November 21, 2019 through December 25, 2019.

Average weekly sales were $62,000 in the fourth quarter 2020, a 6.9% increase compared to the third quarter 2020. This improvement is in addition to typically lower seasonal average weekly sales during the fourth quarter of any given year, and it continued through fiscal January 2021 with average weekly sales of $63,000. During the first three weeks of fiscal February 2021, average weekly sales were $60,000, reflecting the impact of cold weather and snowstorms, which affected nearly all regions.

Licensing revenue in the fourth quarter of 2020 was $5.0 million, a decrease of 10.6% from $5.6 million in the fourth quarter 2019, due to reduced sales related to the COVID-19 pandemic, partially offset by a net increase of 16 Shacks opening between December 25, 2019 and December 30, 2020. This decrease is inclusive of the favorable impact of the 53rd week in the fourth quarter 2020, which resulted in incremental licensed revenue of $0.4 million. Excluding the 53rd week, licensed revenue in the fourth quarter 2020 decreased 17.7%. The Company’s domestic licensed business still faces significant headwinds, with airport and stadium Shacks still either closed or at significantly reduced traffic. As of the end of fiscal 2020, 17 licensed Shacks remained temporarily closed. Furthermore, approximately half of the UK Shacks were closed as of the end of fiscal 2020, as the government maintained lockdowns to control the virus spread. The following table presents fiscal monthly information about the Company’s licensed sales trends.

 

Fiscal 2020

 

Fiscal 2021

 

First
Quarter

 

Second
Quarter

 

Third
Quarter

 

Fourth
Quarter

 

First
Quarter

(dollar amounts in

millions)

Mar 25

 

Apr 22

 

May 20

 

Jun 24

 

Jul 22

 

Aug 19

 

Sep 23

 

Oct 21

 

Nov 18

 

Dec 30(1)

 

Jan 27

 

Feb 17(2)

Weekly licensed

sales(3)

$

4.6

 

 

$

2.0

 

 

$

2.4

 

 

$

3.5

 

 

$

4.6

 

 

$

5.4

 

 

$

5.7

 

 

$

5.9

 

 

$

5.9

 

 

$

6.4

 

 

$

5.6

 

 

$

6.0

 

Total year-over-year

licensed sales growth

(decline)

13

%

 

(65)

%

 

(58)

%

 

(47)

%

 

(32)

%

 

(23)

%

 

(9)

%

 

(10)

%

 

(10)

%

 

4

%

 

(27)

%

 

(7)

%

Number of open

licensed Shacks

96

 

 

56

 

 

59

 

 

91

 

 

98

 

 

104

 

 

105

 

 

107

 

 

106

 

 

106

 

 

107

 

 

108

 

_________________

(1)

 

When excluding the impact of the 53rd week, total year-over-year licensed sales were down 15%.

(2)

 

Represents the first three weeks of fiscal February 2021.

(3)

 

Weekly licensed sales is an operating measure and consists of sales from domestic licensed Shacks and international licensed Shacks. The Company does not recognize the sales from licensed Shacks as revenue. Of these amounts, revenue is limited to licensing revenue based on a percentage of sales from domestic and international licensed Shacks, as well as certain up-front fees such as territory fees and opening fees. 

During the fourth quarter of 2020, the Company opened eight new domestic Company-operated Shacks and seven new international licensed Shacks. These openings were partially offset by the COVID-related closure of two international licensed Shacks.

Location

 

Type

 

Opening Date

Singapore — Suntec City

 

International Licensed

 

September 30

Murray, UT — Fashion Place

 

Domestic Company-Operated

 

October 1

Madison, WI — Hilldale Center

 

Domestic Company-Operated

 

October 5

Abu Dhabi, UAE — Dalma Mall

 

International Licensed

 

October 5

Pasadena, CA — Pasadena

 

Domestic Company-Operated

 

October 12

White Plains, NY — The Westchester

 

Domestic Company-Operated

 

October 26

Makati, Philippines — Greenbelt, Legazpi Village

 

International Licensed

 

October 29

Mexico City, Mexico — Terraza Coapa

 

International Licensed

 

November 5

Houston, TX — The Woodlands

 

Domestic Company-Operated

 

November 19

South Korea — Daejeon Dunsan

 

International Licensed

 

November 20

VivoCity, Singapore — VivoCity

 

International Licensed

 

December 1

Oakland, CA — Oakland

 

Domestic Company-Operated

 

December 8

Denver, CO — Cherry Creek

 

Domestic Company-Operated

 

December 10

Edgewater, CO — Edgewater

 

Domestic Company-Operated

 

December 19

Beijing China — Xidan

 

International Licensed

 

December 21

Operating loss for the fourth quarter of 2020 was $12.2 million, resulting in a negative operating loss margin of 7.8%. compared to operating income of $0.5 million, or an operating margin of 8.4% for the fourth quarter 2019. For the fourth quarter of 2020, Shack-level operating profit, a non-GAAP measure, was $24.4 million, or 16.0% as a percentage of Shack sales, compared to Shack-level operating profit of $18.7 million, or 14.8% of Shack sales in the third quarter 2020. The year-over-year decrease in Shack-level operating profit was primarily due to sales deleverage resulting from the impact of the COVID-19 pandemic. In addition this decrease was also driven by higher delivery commissions as a result of digital sales growth, a number of incremental payroll costs to support Shack employees and increased paper and packaging costs as a result of packaging all orders as ‘to go’ orders. A reconciliation of Shack-level operating profit to Operating income (loss), the most directly comparable GAAP financial measure, is set forth in the schedules accompanying this release. See “Non-GAAP Financial Measures.”

  • General and administrative expenses decreased 0.8% to $19.1 million in the fourth quarter of 2020 from $19.2 million in the fourth quarter 2019. This was primarily due to disciplined cost reduction across the majority of discretionary spend categories including travel and professional services partially offset by increased home office compensation expense as the Company continues to invest in its teams in support of accelerated growth ahead. As a percentage of total revenue, general and administrative expenses decreased to 12.1% for the fourth quarter of 2020 from 12.7% in the fourth quarter 2019, primarily due to lower travel and professional services partially offset by increased investments in our home office teams.

Fiscal 2021 Outlook

Given the substantial uncertainty and resulting material economic impact caused by the COVID-19 pandemic, the Company is not providing full guidance for the fiscal year ending December 29, 2021. The timing of return to pre-COVID sales levels is highly dependent upon the return of the high traffic areas that contributed to many of the strongest Shack sales, including those most reliant on travel, schools, offices and major gatherings, as well as ultimately, fully open dining rooms.

Contacts

Media:

Kristyn Clark, Shake Shack

(646) 747-8776

kclark@shakeshack.com

Investor Relations:

Melissa Calandruccio, ICR

Michelle Michalski, ICR

(844) SHACK-04 (844-742-2504)

investor@shakeshack.com

Read full story here

Share This Post