Shake Shack slammed after weak sales at burger chain

Shake Shack CEO Randy Garutti: 'We believe the company will ultimately benefit' from expansion

Weak sales at Shake Shack store locations weighed on the fast-casual burger chain’s fourth-quarter earnings report on Monday.

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The New York-based company said same-store sales declined 3.6 percent in the fourth quarter. Same-store sales are a key metric in the fast-food industry because they are considered a measure of customer foot traffic.

Shake Shack reported a net loss of $2.1 million, or 6 cents per share, a steeper decline than the 1-cent-per-share loss expected on Wall Street, according to Refinitiv data. Total revenue rose about 22 percent to $151.4 million, short of an expected $153.14 million.

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Shake Shack CEO Randy Garutti attributed the same-store sales shortfall to the chain’s focus on rapid expansion in recent quarters. Shake Shack opened 49 new store locations in the U.S. in fiscal 2019 and plans to open several dozen stores globally in fiscal 2020.

TickerSecurityLastChangeChange %
SHAKSHAKE SHACK INC39.87+1.80+4.73%

“We recognize this level of growth and investment, at times, can have a near-term impact on same-Shack sales and other aspects of our financial performance, but we believe the company will ultimately benefit from this strategy over time,” Garutti said in a statement. “We are excited about our future and the significant runway we have ahead, as we quickly approach a billion dollars in total system-wide sales and build a company not just for quarters, but for years to come.”

A Shake Shack in Tokyo. (iStock)

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Shake Shack shares fell more than 10 percent in after-hours trading on the results. Earnings were announced amid pressure in the broader market, as the Dow Jones Industrial Average shed more than 1,000 points due to the global impact of coronavirus.

For the full year in fiscal 2019, Shake Shack said total revenue grew 29 percent to $594.5 million. The company said it expects total revenue in 2020 of between $712 million and $720 million, a figure which fell short of expectations.

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