What's Taking a Bite Out of Shake Shack Sales?

Food and BeverageReuters

Shake Shack Inc, known for indulgent antibiotic-free hamburgers, crinkle-cut fries and frozen custard shakes, on Wednesday reported a weaker-than-expected rise in quarterly sales at established restaurants.

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Shares in the company tumbled 8.7 percent to $37.30 in extended trading after the chain said closely watched same-restaurant sales were up 4.5 percent during the second quarter. Analysts had expected a 5.4 percent rise, according to research firm Consensus Metrix.

Traffic to U.S. fast-food chains has been weak due in part to competition from grocery stores, which have been raising food prices at a slower pace than restaurants.

The company had net income of $3.3 million, or 14 cents per share, versus net income of $1.1 million, or 8 cents per share, in the year-ago period.

Adjusted earnings were also 14 cents per share, topping analysts' average estimate by a penny, according to Thomson Reuters I/B/E/S.

Total revenue rose 37 percent to $66.5 million.

Shake Shack shares debuted in January 2015 on the New York Stock Exchange at $21 a share and briefly topped $100 a share in May 2015. They have underperformed the S&P 500 since November.

(Reporting by Lisa Baertlein in Los Angeles; Editing by Marguerita Choy and Jonathan Oatis)

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