On July 30, 2020, Shake Shack Inc. (NYSE: SHAK) reported its financial results for the second quarter ended June 24, 2020, a period that included 13 weeks. Shake Shack reported Q2 EPS of (45c) versus the consensus estimate of (37c). The company reported Q2 revenue of $91.8M versus the consensus estimate of $93.01M. Q2 Same-Shack sales decreased 49.0%.
Randy Garutti, Chief Executive Officer of Shake Shack, stated, “Throughout this difficult time, I remain incredibly proud of our team. They’ve continued to show up, to support each other, our guests, our communities and our suppliers. They’ve had an unwavering commitment to excellence and hospitality in the face of an incredibly challenging operating environment. We owe them a debt of gratitude, and remain committed to their safety, well-being and ongoing development and growth.”
Garutti concluded, “Despite the challenging environment, total sales and average weekly sales have shown continued improvement throughout the second quarter and the third quarter through July 22. We’ve got the strongest balance sheet we’ve ever had, and with gradual recovery underway across the country, we’re bullish on our long-term growth opportunity which remains as strong as ever. We’ve restarted new Shack development, opening nine domestic company operated Shacks to date this year and targeting a total of 15 to 20 for the full year. We’ve also accelerated work on new Shack formats, adding to our long-term real estate pipeline and sales opportunity. We’ve created our “Shack Track” pickup model which will be incorporated in many of our new Shack designs as well as retrofitted in certain existing Shacks, and have started the design process for our first ever drive-thru location, planned to open in 2021. We have a strong identified pipeline of leases in negotiation and believe additional and improved development opportunities may be available over time due to the impact of COVID-19 on the overall retail and real estate environment.”
Financial Highlights for the Second Quarter 2020 compared to the Second Quarter 2019:
Total revenue decreased 39.9% to $91.8 million.
Shack sales decreased 39.5% to $89.5 million.
Same-Shack sales decreased 49.0%.
Licensed revenue decreased 53.1% to $2.3 million.
Shack system-wide sales decreased 45.2% to $123.8 million.
Operating loss of $24.1 million compared to operating income of $11.9 million in the prior year second quarter.
Shack-level operating profit, a non-GAAP measure, decreased 94.7% to $1.9 million, or 2.2% of Shack sales.
Net loss was $18.0 million and adjusted EBITDA, a non-GAAP measure, was a loss of $8.8 million, compared to net income of $11.2 million and adjusted EBITDA of $25.9 million in the prior year second quarter.
Net loss attributable to Shake Shack Inc. was $16.2 million and adjusted pro forma net loss, a non-GAAP measure, was $18.3 million, or a loss of $0.45 per fully exchanged and diluted share, compared to net income attributable to Shake Shack Inc. of $9.0 million, adjusted pro forma net income of $10.2 million, or $0.27 per fully exchanged and diluted share, in the prior year second quarter.
Five system-wide Shack openings, comprised of four domestic company-operated Shacks and one licensed Shack.
As of June 24, 2020, the Company had $190.8 million in cash and marketable securities on hand.
The pandemic forced burger chain Shake Shack to temporarily close some locations and limit dine-in. But the company has plans to open a drive-thru next year and make a big push into digital. Shake Shack CEO Randy Garutti joins “Squawk Box” to discuss the company’s wider-than-expected quarterly loss.