Shake Shack (NYSE: SHAK) is scheduled to report its earnings results for the second quarter of 2019 on Monday after the market closes. The top line of the fine-casual burger chain will be benefited by the Shack sales and licensing revenue while an increase in labor, pre-opening costs, and unfavorable foreign exchange translations could hurt the bottom line.
The company is looking forward to long-term success by taking advantage of its current strategies. This include opening new domestic company-operated Shacks, capitalizing on outsized brand awareness, innovating digital products and capabilities, growing same-Shack sales, and thoughtfully increasing licensed Shacks.
Shake Shack is a modern day “roadside” burger stand serving a classic American menu of premium burgers, hot dogs, crispy chicken, frozen custard, crinkle cut fries, shakes, beer, wine and more. Since its inception, Shake Shack has grown rapidly with 218 Shacks, as of March 27, 2019, of which 129 were domestic company-operated Shacks, 15 were domestic-licensed Shacks, and 74 were international licensed ones. And, the company continues to expand globally.
The company has been facing stiff competition from quick service restaurants and casual dining restaurants who have started offering better quality ingredients such as antibiotic-free meal. The competition continues to intensify as new competitors enter both the burger and fast casual segments, as well as new digital experience and convenience food options.
Analysts expect the company’s earnings to drop by 24.10% to $0.22 per share while revenue will jump by 28.60% to $149.52 million for the second quarter. The company has surprised investors by beating analysts’ expectations thrice in the past four quarters.
Also read: Kellogg Q2 earnings
For the first quarter, Shake Shack posted a 27% drop in earnings due to higher costs and expenses as well as an increase in income tax expense. Shack sales increased by 33.8% due primarily to the opening of 34 new domestic company-operated Shacks, as well as same-Shack sales growth. Licensing revenue climbed by 33.5% due primarily to the opening of 16 net new licensed Shacks.
For the full year 2019, the company expects total revenue in the range of $576 million to $582 million and same-shack sales growth in the range of 1% to 2%. Shake Shack predicts to open 36 to 40 domestic company-operated Shack stores and 16 to 18 licensed Shack stores during the full year 2019.
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