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Sep 23, 2020
Shake Shack Q3 2020 Earnings Report
Showed steady recovery with significant improvement in sales and profitability.
Key Takeaways
Shake Shack Inc. reported a 17.3% decrease in total revenue to $130.4 million for the third quarter of 2020, but showed sequential improvement compared to the prior quarter. Same-Shack sales improved sequentially, and Shack-level operating profit margin improved to 14.8%. The company opened six system-wide Shacks and had $191.8 million in cash and marketable securities on hand.
Average Weekly Sales and Same-Shack Sales Show Significant Sequential Improvement in both Urban and Suburban Shacks
Sales in Company-Owned Digital Channels Tripled Compared to Prior Year
Shack-level Operating Profit Improves to 14.8% Compared to 2.2% in Second Quarter 2020
Total revenue decreased 17.3% to $130.4 million
Shake Shack
Shake Shack
Shake Shack Revenue by Segment
Revenue by Segment
Shack Sales Revenue
CapyFin.com Forward Guidance
Due to the uncertainty caused by the COVID-19 pandemic, the company is not providing full guidance for fiscal year 2020. Sales are expected to be pressured in the coming months due to colder weather and increasing COVID cases. The company expects to open 18 to 20 new company-operated Shacks and 5 to 6 new licensed Shacks in the fourth quarter of 2020.
Positive Outlook
- Company expects to open 18 to 20 new company-operated Shacks by the end of fiscal 2020.
- Company expects to open five to six new licensed Shacks in the fourth quarter 2020.
- Company expects to open between 35 and 40 new company-operated Shacks in fiscal 2021.
- Company expects to open 15 to 20 new licensed Shacks in fiscal 2021.
- The company has the benefit of a 53rd week in this fiscal year which will be accretive on an absolute dollar basis
Challenges Ahead
- Timing of return to pre-COVID levels is highly dependent upon the return of high traffic areas.
- With the colder weather and the increasing number of reported COVID cases, it is expected that sales over the coming months will be pressured.
- The underlying business continues to face a very challenging and volatile operating environment certainly through the end of this year.
- The Company expects any ongoing improvement in Shack-level operating margin in the fourth quarter to face pressure.
- Pre-opening expense is expected to more than double sequentially through the fourth quarter 2020 as the Company completes this year's opening schedule.