Shake Shack Inc. Q2 FY2025 earnings call

• Team and Culture: CEO Rob Lynch thanked team members for helping communities affected by weather, raised over $100k for floods. Introduced Jamie Griffin as Chief People Officer. - Operational Performance: Q2 restaurant-level margin expanded nearly 200 basis points to ~24%. Implemented performance scorecard, improved labor, speed, and order accuracy. - Culinary Innovation: Achieved 1.8% same-Shack sales growth, culinary innovation contributed ~1 percentage point. Tested paid media, launched Dubai Shake and Dollar Soda promotions. - Development: Opened 13 new domestic company-operated Shacks, on track to open 45-50 company-operated Shacks in 2025. Licensed business had 9 new openings, announced partnerships, and second domestic support center in Atlanta to open later this year.

Total revenue for the second quarter was $356.5 million. System-wide sales grew 13.7% year-over-year to $549.9 million. Licensed business revenue grew 20.2% year-over-year to $13.3 million, with sales up ~16% to $206.7 million. Company-operated business Shack sales grew 12.4% year-over-year to $343.2 million with 13 new Shack openings. Same-Shack sales grew 1.8%, menu price up ~2% blended across channels ~3%. Restaurant-level profit margin was 23.9% of Shack sales, a 190 basis point improvement year-over-year.

• Third Quarter 2025: System-wide unit openings 20-25 (13-16 company-operated, 7-9 licensed), same-Shack sales low single digits, licensed revenue $13.3M-$13.6M, total revenue $358M-$364M, restaurant-level profit margin 22%-22.5%. - Full Year 2025: System-wide unit openings 80-90 (45-50 company-operated, 35-40 licensed), same-Shack sales low single digits growth, licensed revenue $51.5M-$52.5M, total revenue $1.4B-$1.5B, restaurant-level profit margin ~22.5%, adjusted EBITDA $210M-$220M.

• Macroeconomic and Geopolitical: Actual results may differ from forward-looking statements due to risks in SEC filings. - Commodity Inflation: Elevated beef prices, but supply chain optimizations to mitigate. - Marketing Impact: Uncertainty around new marketing strategies and paid media investments on top line and margins.

Q: Elaborate on incremental efficiencies in labor productivity in Q2.

A: Rob Lynch mentioned focus on operations, improved recruiting/retention, speed of service, and new labor model driving highest labor attainment. Katie Fogertey added on margin impact and upcoming schedule effects.

Q: Changes in go-to-market strategy and marketing implications.

A: Rob Lynch discussed testing paid media, new culinary calendar with LTOs, and targeting specific guests with digital messages. Katie Fogertey noted no immediate top line impact from new media.

Q: Traffic outlook and marketing initiatives impact.

A: Katherine Fogertey said traffic improved sequentially, with July showing positive impact from culinary and early media. Guidance implies flattish traffic with potential lift from media.

Q: Dubai Shake duration and impact on guidance.

A: Rob Lynch said Dubai Shake runs through August, with other innovations to follow, confident in pipeline driving traffic.

Q: Regional performance in NY/Northeast.

A: Rob Lynch noted high-AUV and margin in NY/Northeast, challenges are macro, but confident in improving performance.

Q: 3-year financial targets momentum.

A: Katherine Fogertey said targets are based on growth in openings, productivity, and marketing, confident in achieving them.