Fast-food chain Shake Shack (NYSE:SHAK) reported results in line with analysts' expectations in Q1 CY2024, with revenue up 14.7% year on year to $290.5 million. It made a non-GAAP profit of $0.13 per share, improving from its loss of $0.01 per share in the same quarter last year.
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Shake Shack (SHAK) Q1 CY2024 Highlights:
- Revenue: $290.5 million vs analyst estimates of $290.9 million (small miss)
- Adjusted EBITDA: $35.9 million vs analyst estimates of $35.7 million (small beat)
- EPS (non-GAAP): $0.13 vs analyst estimates of $0.10 (31.3% beat)
- Gross Margin (GAAP): 36.7%, up from 35% in the same quarter last year
- Free Cash Flow was -$2.39 million, down from $8.41 million in the previous quarter
- Same-Store Sales were up 1.6% year on year (slight miss vs expectations of up 1.9% year on year)
- Store Locations: 520 at quarter end, increasing by 71 over the last 12 months
- Market Capitalization: $4.10 billion
Modern Fast FoodModern fast food is a relatively newer category representing a middle ground between traditional fast food and sit-down restaurants. These establishments feature an expanded menu selection priced above traditional fast food options, often incorporating fresher and cleaner ingredients to serve customers prioritizing quality. These eateries are capitalizing on the perception that your drive-through burger and fries joint is detrimental to your health because of inferior ingredients.
Sales GrowthShake Shack is larger than most restaurant chains and benefits from economies of scale, giving it an edge over its smaller competitors.
As you can see below, the company's annualized revenue growth rate of 17.9% over the last five years was excellent as it added more dining locations and increased sales at existing, established restaurants.
This quarter, Shake Shack's revenue grew 14.7% year on year to $290.5 million, falling short of Wall Street's estimates. Looking ahead, Wall Street expects sales to grow 14.3% over the next 12 months, a deceleration from this quarter.
Same-Store SalesA company's same-store sales growth shows the year-on-year change in sales for its restaurants that have been open for at least a year, give or take. This is a key performance indicator because it measures organic growth and demand.
Shake Shack's demand within its existing restaurants has generally risen over the last two years but lagged behind the broader sector. On average, the company's same-store sales have grown by 5.2% year on year. With positive same-store sales growth amid an increasing number of restaurants, Shake Shack is reaching more diners and growing sales.
In the latest quarter, Shake Shack's same-store sales rose 1.6% year on year. By the company's standards, this growth was a meaningful deceleration from the 10.3% year-on-year increase it posted 12 months ago. We'll be watching Shake Shack closely to see if it can reaccelerate growth.
Key Takeaways from Shake Shack's Q1 Results A slight same store sales miss led to a slight revenue miss. However, gross margin was better and adjusted EBITDA beat. Zooming out, this was a mixed quarter. The stock is flat after reporting and currently trades at $103.18 per share.
