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– Total Revenue Increased 104.2%, to $187.5 million, Supported by >300% In-Shack Sales Growth, versus Same Period Last Year

– Same-Shack Sales Up 52.7% Compared to Same Period Last Year

– Average Weekly Sales Showed Significant Improvement, at $72,000 in the Second Quarter and $74,000 in Fiscal July, Supported by Stronger Urban and In-Shack Sales

NEW YORK–(BUSINESS WIRE)–Shake Shack Inc. (“Shake Shack” or the “Company”) (NYSE: SHAK) today reported its financial results for the second quarter ended June 30, 2021, a period that included 13 weeks.

Randy Garutti, Chief Executive Officer of Shake Shack, stated, “We remain on the path towards full sales recovery, with total revenue up over 104% versus the second quarter of 2020. As restrictions relaxed across the country, in-Shack sales rose more than 300% year on year. The resilience of our business can be seen through the ongoing revenue improvement in our hardest hit urban Shacks, while at the same time we retained the strong business we built in our suburban Shacks. Additionally, even as more of our guests came back to meet us in person, we still grew our digital business double digits and retained approximately 80% of the digital sales versus fiscal January 2021, when digital sales peaked. In terms of profitability, Shack level operating margin improved significantly along with sales, however, we do expect margins to moderate in the coming quarters as we make significant investments in our team. Our Shack team members are at the core of all we do and we have committed an additional $10 million in raises, incentives and leadership development over the next year. We remain focused on the recovery of both sales and profitability across our Shack base and growth over the long term. Our strategic plan centers on the evolution of our Shack formats through physical and digital transformation with the objective of delivering a seamless, elevated guest experience.”

Financial Highlights for the Second Quarter of 2021:

• Total revenue in the second quarter of 2021 increased 104.2% to $187.5 million versus the same period last year.
• Shack sales in the second quarter of 2021 increased 102.7% to $181.5 million versus the same period last year.
• Same-Shack sales⁽¹⁾ improved to up 52.7% in the second quarter of 2021 versus the same period last year.
• Licensed revenue in the second quarter of 2021 increased 164.2% to $6.0 million versus the same period last year.
• Shack system-wide sales in the second quarter of 2021 increased 127.7% to $281.9 million, versus the same period last year.
• Operating income in the second quarter of 2021 was $3.3 million compared to an operating loss of $24.1 million in the same period last year.
• Shack-level operating profit⁽²⁾ increased 1,699.7% in the second quarter of 2021 versus the same period last year, to $34.8 million, or 19.2% of Shack sales.

• Net income was $2.1 million and adjusted EBITDA⁽²⁾ was $20.6 million in the second quarter of 2021, compared to a net loss of $18.0 million and adjusted EBITDA of $(8.8) million in the same period last year.
• Net income attributable to Shake Shack Inc. was $1.9 million and adjusted pro forma net income⁽²⁾ was $2.4 million, or $0.05 per fully exchanged and diluted share in the second quarter of 2021, compared to Net loss attributable to Shake Shack Inc. of $16.2 million and adjusted pro forma net loss of $18.3 million, or $(0.45) per fully exchanged and diluted share, in the same period last year.
• Net system-wide Shack openings, comprised of eight net domestic Company-operated Shacks and ten net licensed Shacks.
• Cash and cash equivalents and marketable securities on hand was $420.2 million as of June 30, 2021.

Second Quarter 2021 Review

Total revenue, which includes Shack sales and Licensing revenue, increased 104.2% versus the second quarter of 2020, to $187.5 million in the second quarter of 2021. Shack sales for the second quarter of 2021 were $181.5 million compared to $89.5 million in the second quarter of 2020, reflecting an increase of $92.0 million, or 102.7%, due in part to the opening of 29 net new domestic Company-operated Shacks between June 24, 2020 and June 30, 2021, as well as continued sales recovery across Shack markets.

Same-Shack sales grew 52.7% year-on-year in the second quarter of 2021, compared to up 5.7% in the first quarter of 2021. Sales improved across all regions, and was led by strength of in-Shack dining as well as healthy retention of our digital sales. These trends continued in fiscal July as we saw same-Shack sales up 38% compared to the same period last year. Although suburban Shacks are performing closer to pre-pandemic levels than urban, we saw encouraging momentum across urban Shacks throughout the second quarter. We also reached a milestone in our urban recovery, with the reopening of the Union Station, DC and Grand Central Station, NYC Shacks in late June and early July, respectively. In the Southeast region, notably Texas, same-Shack sales are now above pre-pandemic levels; these markets continue to represent growth opportunities for the business across a variety of formats.

Average weekly sales were $72,000 in the second quarter of 2021, marking the highest level since the pandemic started, and up from $64,000 in the first quarter of 2021. Average weekly sales grew each month of the second quarter of 2021 and were $74,000 in fiscal July.

During the second quarter of 2021, total digital sales, including orders placed on the Shake Shack app, website and third-party delivery platforms, represented 47% of Shack sales. Even as the mix shifted with the return of in-Shack dining, retention of digital sales was approximately 80% in fiscal June when compared to fiscal January when digital sales peaked, with the Company-owned app channel performing higher than our digital average. During the second quarter of 2021 our new purchasers in Company-owned app and web channels grew 16.7% versus the first quarter of 2021, to 2.8 million total new purchasers since mid-March of 2020; continued investment across these channels is helping bring in new guests, even as in-Shack dining returns. We look forward to continuing to build on this strong foundation by offering our guests new and innovative ways to elevate their dining experience.

Licensing revenue for the second quarter of 2021 was $6.0 million, reflecting an increase of 164.2% versus the same period last year. Improvement was driven domestically by the return of air travel across airports and gradual lifting of capacity restrictions at major US stadiums; internationally, improvement was seen across the regions where COVID-related restrictions have been eased.

Operating income for the second quarter of 2021 was $3.3 million, or a positive operating margin of 1.8%, compared to Operating loss of $24.1 million, or an operating loss margin of 26.2% for the second quarter of 2020. For the second quarter of 2021, Shack-level operating profit, a non-GAAP measure, was $34.8 million, or 19.2% as a percentage of Shack sales, compared to Shack-level operating profit of $22.6 million, or 15.0% of Shack sales in the first quarter of 2021. This increase versus the first quarter of 2021 was primarily the result of better than expected recovery of in-Shack traffic as well as strong digital retention. 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 increased to $20.4 million in the second quarter of 2021 from $14.0 million in the second quarter of 2020. The second quarter of 2021 includes $2.0 million of equity-based compensation and other non-cash items. This increase was primarily due to continued investment across the business, as we are committed to investing in our people, marketing and technology. The investments across these initiatives will help support our recovery and the increase in our new Shack pipeline. As a percentage of total revenue, General and administrative expenses decreased to 10.9% for the second quarter of 2021 from 15.3% in the second quarter of 2020.

Development Highlights

During the second quarter of 2021, the Company opened eight new domestic Company-operated Shacks and ten new licensed Shacks. There were no permanent Shack closures in the second quarter of 2021.

In fiscal July 2021, the Company opened one additional domestic Company-operated Shack.

Fiscal 2021 Outlook

The Company is providing revenue and sales guidance for the third quarter of 2021.

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, but is updating full year Shack openings and expense guidance from the ranges provided earlier this year.

Earnings Conference Call

As previously announced, the Company will host a conference call to discuss its second quarter 2021 financial results today at 5:00 p.m. ET.

The conference call can be accessed live over the phone by dialing (877) 407-0792, or for international callers by dialing (201) 689-8263. A replay of the call will be available until August 12, 2021 by dialing (844) 512-2921 or for international callers by dialing (412) 317-6671; the passcode is 13720728.

The live audio webcast of the conference call will be accessible in the Events & Presentations section on the Company’s Investor Relations website at investor.shakeshack.com. An archived replay of the webcast will also be available shortly after the live event has concluded.

Definitions

The following definitions apply to these terms as used in this release:

“Shack sales” is defined as the aggregate sales of food, beverages and Shake Shack branded merchandise at domestic Company-operated Shacks and excludes sales from licensed Shacks.

“Same-Shack sales” 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 prior period was also adjusted.

“Average weekly sales” is calculated by dividing total Shack sales by the number of operating weeks for all Shacks in operation during the period. For Shacks that are not open for the entire period, fractional adjustments are made to the number of operating weeks open such that it corresponds to the period of associated sales.

“Shack-level operating profit,” a non-GAAP measure, is defined as Shack sales less Shack-level operating expenses including Food and paper costs, Labor and related expenses, Other operating expenses and Occupancy and related expenses.

“Shack-level operating profit margin,” a non-GAAP measure, is defined as Shack sales less Shack-level operating expenses including Food and paper costs, Labor and related expenses, Other operating expenses and Occupancy and related expenses as a percentage of Shack sales.

“EBITDA,” a non-GAAP measure, is defined as Net income (loss) before interest expense (net of interest income), Income tax expense (benefit), and Depreciation and amortization expense.

“Adjusted EBITDA,” a non-GAAP measure, is defined as EBITDA (as defined above), excluding equity-based compensation expense, deferred lease costs, Impairment and loss on disposal of assets, amortization of cloud-based software implementation costs, as well as certain non-recurring items that the Company does not believe directly reflect its core operations and may not be indicative of the Company’s recurring business operations.

“Adjusted EBITDA margin,” a non-GAAP measure, is defined as EBITDA (as defined above), excluding equity-based compensation expense, deferred lease costs, impairment and loss on disposal of assets, amortization of cloud-based software implementation costs, as well as certain non-recurring items that the Company does not believe directly reflect its core operations, as a percentage of revenue.

“Adjusted pro forma net income,” a non-GAAP measure, represents Net income (loss) attributable to Shake Shack Inc. assuming the full exchange of all outstanding SSE Holdings, LLC membership interests (“LLC Interests”) for shares of Class A common stock, adjusted for certain non-recurring and other items that the Company does not believe directly reflect its core operations.

About Shake Shack

Shake Shack is a modern day “roadside” burger stand serving a classic American menu of premium burgers, chicken sandwiches, hot dogs, crinkle cut fries, shakes, frozen custard, beer and wine. With its fresh, simple, high-quality food at a great value, Shake Shack is a fun and lively community gathering place with widespread appeal. Shake Shack’s mission is to Stand for Something Good®, from its premium ingredients and caring hiring practices to its inspiring designs and deep community investment. Since the original Shack opened in 2004 in NYC’s Madison Square Park, the Company has expanded to approximately 220 domestic locations in 32 U.S. States and the District of Columbia and more than 100 international locations including London, Hong Kong, Shanghai, Singapore, Philippines, Mexico, Istanbul, Dubai, Tokyo, Seoul and more.

Forward-Looking Statements

This press release contains forward-looking statements, within the meaning of the Private Securities Litigation Reform Act of 1995 (“PSLRA”), which are subject to known and unknown risks, uncertainties and other important factors that may cause actual results to be materially different from the statements made herein. All statements other than statements of historical fact included in this press release are forward-looking statements, including, but not limited to, expected financial outlook and operating performance for fiscal 2021, including guidance for the third quarter and full year 2021, expected Shack openings, expected Same-Shack sales growth, sales opportunities and trends in the Company’s operations. Forward-looking statements discuss the Company’s current expectations and projections relating to its financial position, results of operations, plans, objectives, future performance and business. You can identify forward-looking statements by the fact that they do not relate strictly to historical or current facts. These statements may include words such as “aim,” “anticipate,” “believe,” “estimate,” “expect,” “forecast,” “future,” “intend,” “outlook,” “potential,” “project,” “projection,” “plan,” “seek,” “may,” “could,” “would,” “will,” “should,” “can,” “can have,” “likely,” the negatives thereof and other similar expressions. All forward-looking statements are expressly qualified in their entirety by these cautionary statements. Some of the factors which could cause results to differ materially from the Company’s expectations include the continuing impact of the COVID-19 pandemic, including the potential impact of any COVID-19 variants, the Company’s ability to develop and open new Shacks on a timely basis, the Company’s management of its digital capabilities and expansion into delivery, and risks relating to the restaurant industry generally. You should evaluate all forward-looking statements made in this press release in the context of the risks and uncertainties disclosed in the Company’s Annual Report on Form 10-K for the fiscal year ended December 30, 2020 filed with the Securities and Exchange Commission (“SEC”). All of the Company’s SEC filings are available online at www.sec.gov, www.shakeshake.com or upon request from Shake Shack Inc. The forward-looking statements included in this press release are made only as of the date hereof. The Company undertakes no obligation to publicly update or revise any forward-looking statement as a result of new information, future events or otherwise, except as otherwise required by law.

SHAKE SHACK INC.

CONSOLIDATED STATEMENTS OF INCOME (LOSS)

(UNAUDITED)

(in thousands, except per share amounts)

SHAKE SHACK INC.

SELECTED BALANCE SHEET DATA AND OPERATING DATA

(UNAUDITED)

SHAKE SHACK INC.

NON-GAAP FINANCIAL MEASURES

(UNAUDITED)

To supplement the consolidated financial statements, which are prepared and presented in accordance with U.

Contacts

Media:
Kristyn Clark, Shake Shack

(646) 747-8776

[email protected]

Investor Relations:
Melissa Calandruccio, ICR

Michelle Michalski, ICR

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

[email protected]

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