Shake Shack Delivers Strong Second-Quarter Earnings

The company’s shares are up 55% from a year earlier.

Monday was a gloomy day for those following the stock market, as the Dow plunged more than 700 points. But the bright side came once Shake Shack released its second-quarter earnings report after market close. 

Shake’s Shack’s earnings report exceeded investor expectations across the board and caused the stock to rise more than 8%. The company increased its revenue, earnings, and increased its same-store sales. 

Here is an overview of the earnings report as well as what we can expect from Shake Shack going forward.

Things that are going well for Shake Shack

2019 has been a good year for Shake Shack and its shares are up 90% year to date. The company has primarily focused on expansion and added 19 new restaurants this quarter. 13 of these restaurants are located in the U.S. and six are licensed stores that were opened abroad. 

The company reported adjusted earnings of 27 cents per share, beating analyst estimates of 23 cents per share. And Shake Shack’s revenue rose 31% to hit $152.7 million, also beating analyst estimates of $149.5 million. 

Same-store sales also increased by 3.6%, instead of the 2.0% expected by analysts. And the company increased its revenue guidance for the remainder of 2019. And it expects to open more licensed stores during the rest of the year. 

Shake Shack also announced a new partnership with Grubhub to begin offering delivery options to customers. Grubhub’s Just in Time technology ensures that Shake Shack’s food is delivered quickly and accurately. 

This company will begin testing out this new partnership in four areas. This includes Morningside Heights in New York, River North in Chicago, Livingston, New Jersey, and Darien, Connecticut. Eventually, the delivery service will be offered in 150 different locations. 

Summary

According to Shake Shack CEO Randy Garutti, the company’s digital channels were a key factor in the company’s second-quarter success. And the company is following in the footsteps of other fast-food giants by offering third-party delivery services. McDonald’s recently partnered with DoorDash and UberEats and Yum Brands partnered with Grubhub.

The company’s core growth is small in comparison to larger players like McDonald’s. But if it can continue to expand its stores and grow its customer base, we should continue to see good things from Shake Shack. 

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